Tiny, friendless, overmatched mobile-phone software maker Google, desperate to find a hardware maker willing to support its fringe Android smartphone operating system, has stretched the financial resources it was holding in reserve in the form of change amid cushions of couches in the offices of Larry and Sergey to buy another minor force in mobile computing – Motorola, Inc.
Google's announcement of the acquisition of Motorola Mobility said the move was designed to "supercharge the Android ecosystem," which was withering on the vine with a paltry 38.9 percent share of the smartphone market in June according to an IDC report, compared to a market-dominating 18.2 percent for Apple's iOS.
The four-year growth rate of 23.7 percent per year IDC predicts for Android clearly leaves Google in danger of being forgotten by the smartphone market, especially compared to the 17.9 percent per year IDC predicts for iOS.
Indications from tech-industry Tarot-card and Crystal-Ball readers indicate that the risk that Android will be forgotten – at least by prime allies HTC and Samsung – spiked immediately after the announcement that Google would acquire Motorola – one of their prime competitors.
Ironically, some of the danger to Android may have come directly from Motorola Mobility, whose CEO Sanjay Jha was quoted as hinting he might use the 14,000 patents Motorola holds on mobile-phone technology to press other Android vendors for as much as $60 per device in patent fees.
A release from Motorola quoted Jha today as saying "This transaction offers significant value for Motorola Mobility's stockholders and provides compelling new opportunities for our employees, customers and partners around the world."
Presumably $40 per share Google agreed to pay – a price 63 percent higher than Motorola's closing price Friday – is equal or greater in value than $60 per Android device, once you subtract the amount of Jha's time that would have been spent avoiding calls from Page and Brin telling him to cut it out.
Luckily the task of increasing the workforce of your company 60 percent in an instant is a trivial for businesses in which culture and personality are strong indicators of success. Google should have no trouble with integrating the old-world, old-school Motorola workforce.
Analysts who hadn't had time to actually think about it yet said the move is a good one for Google, the which had been handicapped by its lack of any hardware manufacturing facilities of its own.
Since its decision to stop manufacturing the Nexus One – more a prototype and market-seeding instrument than the reflection of any real intent to enter the hardware market – Google has had to rely on other companies to make the phones and other devices on which Android would actually run.
That has caused problems with and the delay of the next major version of Android – code-named Honeycomb, which is designed to run on and take advantage of the greater resources of tablet computers, not just smartphones.
Vendors including HTC and Samsung use the relatively open model of Android to add their own user interfaces and tweaks, sometimes lessening the impact of having a large number of devices all using what even non-technical customers can tell is clearly the same operating system and functions, widening its appeal.
The strategy of licensing a single operating system to run on almost any type of system available was one of the factors that caused the catastrophic demise of Microsoft during its wars in the PC market with Apple during the 1980s and 1990s.
Their history clearly shows that companies that make both the hardware and operating system of a popular device have a tremendous market advantage over those that focus only on the operating system and on increasing the number of applications available for it.
Despite its alienation of other hardware makers and refusal to license its software to be included in other devices, Apple rose to absolute dominance in the operating system market.
Microsoft – which focused on developing its operating system to keep looking and operating more like Apple's, while recruiting application developers to build software on Windows so users would actually be able to do something useful with their cool hardware – faded into obscurity and eventually disappeared.
By acquiring a hardware-manufacturing capability from one of the largest manufacturers in the mobile-phone/mobile-computing market, Google's leadership is clearly trying to emulate Apple, though without the cultish fanboi following, heavy emphasis on user friendliness, slick design and compelling, image-based marketing.
That decision is a good one for Google because of the how obviously a strong sense of design and fanatic base of followers has held Apple back over the years.
Because there are so few complications or downsides, the acquisition will clearly be a successful one for Google, though there's a good change Motorola Mobility CEO Sanjay Jha – whose threat to collect royalties on Android devices was made six days before the acquisition was announced, meaning negotiations were going on at the time with a company famous for its tolerance for patent trolls – may end up disappeared to a place no search of any kind can find him.