This one was certainly a surprise. Google's acquisition of Motorola's Mobility business for $12.5 billion changes the landscape for Android irrevocably—whether or not Google wants to admit it.
The patent piece of this deal is pretty clear. Sanjay Jha, CEO of Motorola Mobility, pointed out in the conference call that the company has a portfolio of over 17,000 patents worldwide, with another 7,500 somewhere in the application process. That will give it the legal ammunition it was lacking in the fight against Microsoft, Apple, Sony Ericsson, and others over the Novell and Nortel patents.
This is also a boon for Motorola, which has been struggling to break out of the single digits in market share in recent years. Even though it has been entirely committed to building Android devices since 2008, the company still trails rivals Samsung and HTC by a significant margin, according to recent IDC numbers on worldwide smartphone shipments.
It's the other implications of the deal that are worrisome. Google just became a hardware vendor for its own operating system. That upends the entire ecosystem. Google itself is denying this, of course, with company co-founder Larry Page pledging in a blog post today to run Motorola as a separate business. But as former Engadget editor and copyright attorney Nilay Patel said on Twitter, the real question for Google is how they're going to do that better than everyone else who has tried to both license an OS and be an OEM?
Patel's point is important. There are currently five major smartphone operating systems in play: Android, iOS, Windows Phone 7, webOS, and BlackBerry OS. Three of them are wholly controlled by a single vendor in each case: Research in Motion makes all BlackBerry OS phones, Apple makes all iOS devices, and HP now makes all webOS-powered gadgets after buying Palm last year.
The other two—Android and Windows Phone 7—appear on dozens of phones from various vendors, including HTC, LG, Samsung, Motorola, Pantech, Casio, and Sharp. All of these manufacturers make Android phones, though not all make Windows Phone 7 phones (at least not yet); either way, put that aside for a moment. The way this has worked all along is that Google wasn't making any Android phones itself, and Microsoft wasn't making any Windows Phone 7 devices either. Consequently, each vendor can feel confident that they're working on a level playing field. Each one can add its own UI layer, apps, and other features, but they're all working with the same basic OS.
Once Google starts selling its own Android phones, which is effectively what happens post-Motorola acquisition, it changes everything for the other licensees. How would they know for sure that they're getting all the same OS updates as quickly as Motorola? Wouldn't Google have plenty of incentive to stack the deck in favor of its own hardware?
These possibilities won't be lost on consumers, either. They could also think along the same lines, and begin to buy more Motorola phones, since they're the only "truly authentic" Android devices on the market.
At the same time, we've all seen the results of having such an open eco-system, and they're not always for the best. Android phones have plenty of good qualities, including a wide range of screen sizes and resolutions, 4G, dual-core processors, devices with and without hardware QWERTY keyboards in different shapes and sizes, free GPS navigation, and smooth integration with virtually all of Google's existing desktop services.
But Android devices are also known for carrier-installed bloatware, occasional bugs, and fragmented third-party app compatibility. That's not to mention an OS upgrade process that's dependent on the device, the carrier, the phone vendor, and the weather on Tuesday. It's much tougher to develop a bug-free app that runs properly on over 100 SKUs, with so many possible screen, CPU, and OS version variables, than it is to develop one for a few dozen (in the case of BlackBerrys), or especially just a few (for iOS or webOS).
By buying up Motorola Mobility, Google can eliminate all of those issues and control the hardware, the same way Apple, Research in Motion, and HP do. But that also leaves the other OS licensees in the lurch, wondering if they can no longer trust their former business partner. For example, it's possible that in response, HTC, Samsung, and LG will boost their existing commitments to Windows Phone 7, an OS that's looking increasingly attractive in light of the upcoming Mango OS updates and Nokia's all-in deal. Heck, HP could even do something with webOS, as Ben Bajarin suggested. A surprise license to another hardware vendor could open up the market for a good platform that never really got a fair shot in the marketplace.
Android itself is safe for now, of course. Motorola has already churned out a slew of top-notch Android phones. Now, they're only going to get even better, as Google moves to strengthen the platform and tie it to the hardware much more tightly than before. But make no mistake; despite what Google says, now all of the company's other Android partners are mulling over their future with it.
For more, see Google Acquires Motorola Mobility: What You Need to Know, as well as Google's Motorola Deal Closes a Door, Opens for Windows, and Why Google is Buying Motorola Mobility.