The News of the acquisition of Motorola Mobility by Google for US$12.5 billion drachmas struck me like one of Zeus’ Thunderbolts (A bit of Apple humor there!) on Monday August 15th 2011AD as reported by Ryan Kim of GigaOM.
Sanjay Jha, CEO of Motorola Mobility, which had been spun off from Motorola, spoke of the merger, quote: “This transaction offers significant value for Motorola Mobility’s stockholders and provides compelling new opportunities for our employees, customers, and partners around the world. We have shared a productive partnership with Google to advance the Android platform, and now through this combination we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home businesses.”
Google CEO Larry Paige official statement on the purchase of Motorola Mobility made it look like a routine acquisition with an aim to further their interests in Google Android by making hardware and software that work well together, somewhat akin to Apple, their main rival. Other handset maker who use Google Android, naturally, are not happy, as it mean they are now in competition against the maker of the Open Source Google Android OS that runs their smartphone offerings.
“Boring stuff acquisitions”, you yawn, inquisitive but uninterested, dear reader!
After all, this was the stated aim for Google Android going forward: World Domination on an Appliance, consumer electronics and even Automobile scale as per my musings in Apple’s Revolution: Android @ Home and IceCream Sandwich in 2015AD. Already, Google Android, even without the release of Google Ice Cream, shows every sign of doing so in BOTH the Tablet and Smartphone realm as intoned in Android Tablets gain on the Apple iPad – Here Comes the Hot Steppa.
Aside from the big names involved and the large amount of money changing hands, it‘s a straight forward acquisition, nothing unusual. That is, until you take a closer look……as it’s not all about Android and making better smartphones.
The purchase seems pretty fair. Motorola, the darling of the Telecoms World that gave us the DynaTac and the StarTac cellphones in the early 90’s fell on hard times and was revived from near bankruptcy by Google Android, making a splash at CES (Computer Electronics Show) 2011with the Motorola Xoom as my article Motorola and the Xoom – The Empire Strikes Back lays it straight.
Motorola later spun off its Mobile arm into what is now know as Motorola Mobility makers of the Motorola Xoom which is not doing so well in the US Market as observed in my article Motorola Xoom – 101 on How to Beat the Apple iPad, a separate entity from Motorola. I was well acquainted with Motorola in my years as a Network Maintenance Technician stationed at the Pembroke/North Exchange at C&W (2001 to 2004), which still makes Telecoms Gear.
They make great, solid, rugged RBS (Radio Base Station) equipment, with as those square-shaped point-to-points or point to multipoint Microwave Antenna as well as their diagnostic software tools. The handsets, honestly, were not the most user friendly, but you couldn’t fault them for quality and robustness.
Thus Google’s purchase of Motorola Mobility, takes this still-recovering asset off Motorola’s hands and give Google a leg-up in the smartphone handset game, came just in time, as their lack of marketing savvy and expensive gear meant that their competitors in the smartphone game were ranging upon them real fast. Bankruptcy around the corner again if smartphone and Tablet sales, despite the innovative gear, did not pick up soon!
Motorola is sitting on a treasure trove of IP (Intellectual Property) Trinkets, a benefit to Google, after having lost out on some six thousand (6000) Patents from the bankrupt Nortel Networks Patent sale to Apple. Microsoft, Sony and RIM in June of 2011AD. This after they had displayed interest from early after the approval of said parent sale by the US and Canadian Courts in order to sell of Nortel’s intellectual property, only to lose out to the above consortium to the tune of US$4.6 billion drachmas after pledging some US$900 million in cold cash.
Thus, this purchase of Motorola is about the IP, roughly some seventeen thousand (17,000) Patents with an additional seven thousand five hundred (7,500) pending some two (2) months later after the gang of four beat them to Nortel’s Patent treasure trove is thus logical. To quote the words of Avian Securities analyst Matthew Thornton: “It’s about the Patents. Operations are house money.”
Remember, in Silicon Valley, known for frequent lawsuits and squabbles over Intellectual Property such as the ongoing spat between Apple and Samsung as rendered in the article Samsung Galaxy Tab Banned in European Union Patents = money! Not to mention providing protection once their quiver is stocked with the Patent arsenal from Motorola.
But it’s a bit deeper than that, folks, and this is where the excitement ratchets up and will not disappoint. Google is doing quite well in the mobile handset and Tablet space, now commanding Global marketshare as per my analysis in Android Tablets gain on the Apple iPad – Here Comes the Hot Steppa and with a potential to achieve 50% of Global martketshare by 2015AD.
Even the so-called “White Box” DIY (Do-It-yourself) Tablet segment, an analogous equivalent to the segment of the PC market where techies buy and build their own computers or “boxes”, commanding a 19.6% share of the Tablet Market, prefers the Android OS due to its Open Source Nature and its App Store choc full of free apps. The techies obviously support Java-based Android, making their ambitions for World Domination with Google Android 4.0 codenamed Ice Cream that much easier as per my article Apple’s Revolution: Android @ Home and IceCream Sandwich in 2015AD.
So to be clear, Google CEO Larry Paige is performing media obfuscation, to put it mildly. Their real reason for acquiring Motorola Mobility, aside from Patents, is to improve their Google TV offering, their thus far lacklustre IPTV (Internet Protocol Television) streaming Set top boxes.
These devices, manufactured to specification by Third Party set-top box makers such as Logitech and their Google TV, the Logitech Revu, have recently seen a price cut from its lofty price of US$249 to US$99 to match with the IPTV industry leader, Roku and Apple CEO Steve Jobs “hobby” the Apple iTV.
Good to note here that these set-top IPTV streaming boxes are nothing more than a Platform for streaming Services such as Netflix, slated to come to the Caribbean and Latin America in the Fourth Quarter of 2011AD as stated in the Kelroy’s article Netflix service coming to the Caribbean and Latin America
Netflix is a disruptive force that will create havoc for Local Jamaican Free-to-Air Television Stations and Triple Play Provider FLOW, who is already changing their services in anticipation of their coming as my article FLOW goes 3D HDTV et al – Netflix to make FLOW Extinct notes! The same is ALREADY happening in the US of A, with Netflix now No.3 Content Provider behind 1st place Comcast and 2nd Satellite TV Provider DirecTV, based on just subscriber numbers alone.
This is not even factoring in the fact that Apple may be planning a streaming 3D-HDTV set to mate with its Apple iTV set top IPTV box, which would have strong support from Apple fanboys the world over IF it were to exist and be launched in 2012AD as per my article Web-enabled Television Sets Sales Rise – The Apple Television cometh, a situation that would further compound Google’s troubles IPTV streaming troubles.
Access to Motorola’s technical know-how would level the playing field against Apple and give them a leg-up against Roku. The fact that they are responsible for making most of the set-top boxes used by Cable companies combined with Google@Home to control your Home Entertainment Gear based on Google Android Ice Cream should be enticement enough for Hollywood to trust Google again.
Thus the Hollywood barons and mavens would allow currently blocked content to be streamed to Google TV set-top boxes, with Motorola Selective Streaming Control Technology baked inside to protect their Intellectual Property.
This an essential arsenal to entice Hollywood to trust Google in the coming IP and Set Top Box Wars, as Cable companies are already folding under the might of Netflix. Thus the companies who have anything real to fear from Google’s purchase of Motorola Mobility is DEFINATELY NOT the smartphone handset makers, as Google Ice Cream will continue to make dividends for them via lowering the cost of making smartphone handsets and thus increasing their profit margins.
Rather, it is the Cable companies that must now begin to worry and change themselves to this coming streaming paradigm, as Google may now, upon acquiring Motorola Mobility, begin negotiations with Hollywood barons with regards to hosting and possibly streaming their content from Google’s servers, armed with the technical know-how of Motorola Mobility. All in time for London Olympics 2012 slated for July 27th 2012AD.
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