Google got a great price for Motorola’s patents, which well help protect the company from lawsuits that otherwise might have been crippling.
Google also said that it will not give Motorola favourable treatment, and that it will have to fight for Google’s business like all the other third-party manufacturers of phones running Google’s mobile operating system, Android.
Google continues to say that there will be a firewall between Motorola’s – let’s be real and call it Google’s – handset hardware development and Google’s handset operating system development.
But here’s the truth, according to a person briefed on Google’s plans for the merger: while Google may have originally wanted to buy Motorola for its patents only, it has come to realise that it wants to follow Apple’s lead when it comes to smartphone and tablet computer development. A second source, also briefed on Google’s plans for Motorola, confirms this is true.
(Both sources declined to comment because each would like to continue being briefed by Google on its plans.)
Google now wants to design smartphone hardware, software, and make the sale.
To be clear: Google’s ambition is not another Nexus One, a third-party manufactured smartphone it helped design from the ground-up in an effort to show all that Android could do. Google wants to do more. It wants to have its own iPhone business.
Whether Google will actually be able to pursue this plan, over the furious objections of some partners, is still up in the air.
The third-party companies that already make Android phones – Samsung and HTC lead the way – are slowly realising Google’s intentions, and they are furious.
An executive who met with one of these manufacturers and tells us that every single conversation during this meeting ended back at the same point: anger and dismay with Google.
There is a chance that the companies that make Android phones will be able to band together and demand that Google sell Motorola’s handset business.
There is a model for this kind of stand against Google.
Motorola Mobility’s other big business is manufacturing set-top cable boxes.
After acquiring Motorola for its patents, Google’s plan for this business evolved to the point where Google realised it wanted to stay in the cable box business after the merger. Google TV was a flop, and Google wants to win in the living room.
Executives from several of the top cable system operators – called MSO in industry lingo – caught wind of this plan. Then something strange happened. Facing a powerful external threat, these executives banded together, called Google and threatened war unless Google agreed to back down and sell the cable-top business as soon as possible. The threats worked, and Google’s revised plan is to spin the cable top business off.
The smartphone manufacturers that make Android phones could follow this strategy. But so far, they aren’t talking, and Google’s merger is one regulator’s approval (China’s) away from closing. Insiders expect that third-party Android phone-makers – which are incredibly diverse in size, strategy, and geography – will not form any sort of alliance in time to force Google to sell the handset business. These people assume that Google won’t see any fallout from its plans to copy the iPhone business model until it actually does.
What will that fallout look like? Obviously, no one knows. But some speculation seems compelling: Expect a lot of Asian smartphone makers to start developing phones for Windows 8.
Briefed on the details of this story, a Google spokesperson declined to comment because Google’s merger with Motorola Mobility has not closed yet and that means Motorola and Google are still operating as separate companies.
In regards to Google’s plans to sell Motorola’s cable box business, this Google person declined to comment on “rumours and speculation.”
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