Google Acquires Motorola Mobility: The Big Picture

Well played Google, well played. The post-Schmidt giant has been busy competing against Facebook, competing against Facebook again, and now buying their very own mobile handset manufacturing outlet.

“It’s About the Patents!”

Prior to the Motorola Mobility purchase, Google’s weak hand of 701 patents pales in comparison to Microsoft, who was granted 3,121 patents just in 2010. Acutely aware of its vulnerability to patent lawsuits, Google is staffing up on patent lawyers, clerks and legal experts. Just one month ago, Google’s job openings included a number of patent-related positions, including a patent agent, patent counsel, patent docketing clerk, patent litigation counsel, patent paralegal, and a strategic patent licensing and acquisitions manager. So it seems likely the move was focused squarely on shoring up defenses against patent trolls. Afterall, Google stacked up enough legal firepower needed to put up a strong legal defense. Google also recently criticized Microsoft and Apple of trying eviscerate Android with a patent guillotine rather than competing in the market.

Buying Motorola means buying Motorola’s patents, as Google specifically pointed out in its blog post today. You can almost feel the disdain for our absurdly screwed up IP patent system in the writer’s prose:

“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.”

The Android Satellites

While Google has been left untouched, Apple filed a number of rather lame-ass motions targeting Android device makers Samsung and HTC. Even Techcrunch railed against Apple’s actions (shocking!). Oh, and Microsoft also decided to pile up on HTC too. Care to guess whether HTC’s top brass is supportive of Google’s latest acquisition? Let’s see what they have to say about this:

I'm Smiling on the Inside.

“We welcome the news of today‘s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.”
– HTC CEO Peter Chou

Oh I bet you do Peter.

HTC isn’t the only party to take sides: virtually every other handset maker chimed in with either enthusiastic praise, or at least cautious optimism. Regardless, the biggest winners (other than Google) are the smaller satellites in the Android galaxy, who would probably be forced to walk into Microsoft’s waiting arms. The Motorola acquisition is not just lawsuit insurance – it’s market marginalization insurance.

The True Mark of Genius is Turning Disadvantage Into Advantage.

Picture this: you walk into a Verizon store in the future, determined not to buy an iPhone. You have a few choices, here, but it boils down to the Google-Motorola dynamic duo or Windows Mobile on Nokia phone. Ah, yes Nokia; The company which Microsoft invested in earlier this year. They did so to ensure a locked-in downstream mobile handset licensee for Windows Mobile. Nokia, who has a trickle of a market share in the two largest mobile markets in the world.

"Wait they bought Motorola, which means we're stuck with.. aww shit."

I suppose it’s a sweet deal for struggling Nokia, who was quick to go to press today:

“This further reinforces our belief that opportunities for the growth of Nokia’s smartphone business will be greatest with Windows Phone. Additionally, with our respective intellectual property portfolios, Nokia and Microsoft are working together to build and nurture an innovative ecosystem that benefits consumers, operators, developers and other device manufacturers.”

In other words, there are meetings happening in Redmond right now focused on how to make the best of a competitive disadvantage.

The Freedom to Run Android

You know what else Google now owns? 29% of the Android market in the U.S.

That’s a large enough share to drive Samsung and HTC to deliver user experiences consistent with Google’s vision, or else Motorola will. The mobile handset makers are probably wondering if Motorola will enjoy special benefits or access to Google itself. While Motorola is playing down the possibility, it’s likely Motorola will be the reference standard. That means a previously toothless Google couldn’t do much to combat rampant skinning which leads to Android phones with confusing interfaces which look like ass. Google’s primary advantage over the iPhones has been hardware selection. Apple’s competitive advantage over Android has always been the kind of slick user experience only possible with end-to-end control of the product. The Motorola acquisition allows Google, at least on paper, to have it both ways. I wouldn’t be surprised if Google starts making noise about how handset makers should compete on hardware horsepower and quality build, etc. If I were Larry Page, that’s what I would do. That and pick up a shiny new Tesla.

Learning The Lessons of GoogleTV

Earlier in the year, GoogleTV became a casualty of an entertainment industry which withheld critical support for the internet television devices. Google’s management apparently learned from that painful experience that locking down technical talent isn’t enough to come out ahead. It also appears Google is no longer willing to lead its from behind, but rather drive their partners kicking and screaming towards a a better user experience. All it cost was 12 billion. The price appears to be worth it.

Google+ Games is Here

In June 2011, a reference to “Google+ Games” appeared the fledgling social network’s code, suggesting Google would strike at Facebook’ gaming cash cow.

Fast forward to today, a Google+ Games icon began showing up in a number of users’ profiles. The Google+ team is rolling out a few early previews to a small group to test out the new service.

The Google+ games project is launching with 16 new games, including titles from Playdom (City of Wonder), Rovio (Angry Birds), and Zynga (Zynga Poker). Here’s a screenshot form the google blog listing the initial game offerings:

The significance? Facebook levies a fee of 30 cents out of each Dollar for games on its platform. Google’s proposed cut is a measly 5 cents, which strikes directly at Facebook’s cash cow. According to an analyst at Privco’s, Facebook relies on gaming for over a third of its revenues. Since fiscal 2011 revenues stand at 3.8 billion, we’re looking at a 1.25 billion Dollar salvo launched at the Palo Alto social network. The move likely draws a collective cheer from game developers and consumer advocates, who’ve railed against Facebook’s rather large revenue share. This was a market itching for competition.

If I were to guess at what’s next, I’d say Facebook will adopt a wait and see attitude, and drop its revenue share rates if Google begins to make serious inroads into casual gaming. I’d also bet we’ll see the impact of Google+ games on Facebook’s mammoth revenues in short order, one way or another. But the biggest winner seems to be Zynga, who now looks forward to an IPO where it can boast a viable alternative to a Facebook dependency to boost valuation numbers.

Oh, and if you haven’t gotten the “gaming icon” on your Google+ feed yet, here’s a video to rub salt in the wound.. er.. I mean to give you a preview of things to come.

Incidentally, since Google+ is now in gaming, can music be far behind?