Google Mobility

Google Inc. and Motorola Mobility Holdings Inc. revealed an acquisition plan for the search behemoth to integrate the smartphone manufacturer and array of offerings. Elsewhere, new surveys detail the growing popularity of smartphone platforms and the disparity needed by carriers for supporting those operating environments.

Focal Points:

• In its largest-ever acquisition, Google announced it would acquire Motorola Inc.'s Motorola Mobility spinoff, which manufactures popular Android-based smartphones and television set-top boxes. The deal is valued at $12.5 billion and represents more than a 60 percent premium on the company's stock price. Motorola Mobility Holdings has more than 17,000 current patents and 7,500 patent applications across wireless standards and wireless service delivery. Google is touting the acquisition as an effective means of staving off patent infringement lawsuits from the likes of Apple, Inc. and Microsoft Corp. Though the company claims it says it will allow the Motorola unit to run as a separate company that licenses Android in the same manner as other hardware vendors, speculative rumors are swirling regarding the company's long-term strategy.
• New phone shipment numbers demonstrate the rising strength of the smartphone despite a small overall decline of 4.4 percent as component shortages due to the earthquake in Japan plagued vendors. Smartphone sales rose 74 percent from the same quarter in 2010 to a record 107.7 million shipments and now account for 25 percent of all phone sales worldwide.  Android proved to be the most dominant smartphone platform and a particular standout reaching 43.4 percent market share with 46.8 million devices shipped, up more than 400 percent from the prior year. Apple’s sold 19.6 million iOS–based iPhones and achieved an 18.2 percent market share, helping the company achieve another four percent of the market. Research in Motion Ltd.'s (RIM) BlackBerry line of devices accounted for only 12.7 million units and Microsoft's Windows Mobile Phone 7 dropped somewhat from the 1.6 million units moved in the first quarter of this year.
• Android's meteoric rise in popularity comes with a price. Google’s desire to create an ecosystem wherein users get a vast majority of Internet-based services from the tech giant and use detailed knowledge of user behavior to target applicable advertisements to audiences is legendary. Beyond the issue of privacy concerns lies that of Android support requirements according to a recent report from analytic firm Clickfox, Inc. The company's look at the support costs for Android, BlackBerry, iPhone showed that Apple's popular platform required less carrier-based tech support than its counterparts. The research analyzed the time required, number of call transfers, time required to assist users with their issues. Findings demonstrated that while iPhone issues were most frequently solved on the first call, Android users required additional assistance 77 percent of the time and BlackBerry users needed more support 37 percent of the time.

Experton Group believes Google's Motorola Mobility acquisition is smart and sensible no matter what the company's ultimate motivations are for the smartphone and television box manufacturer. The number of frequency of lawsuits filed against vendors using the Android operating system are sure to increase and Google must have access to a breadth of its own patents to keep the wolves at bay. Still, Google could have acquired other companies with even greater patent riches for a far less dear amount, raising suspicious that the company may choose to meld operating system and hardware more seamlessly together in relatively short order.

RIM made claims about its intention to use its QNX acquisition to better tie phones with cars, and is instead using that technology as the basis for the next version of the BlackBerry operating system. What is not in dispute is the increasing use of smartphones and tablets as a dominant means of accessing Internet-based content; demonstrating the solid strategy shared by both Apple and Google in developing powerful ecosystems centered around their mobility products.

IT executives should expect both players to continue to demonstrate strength by building technology stacks and patent portfolios, and for other market players to lose additional ground to them. Microsoft may find some hardware manufacturers afraid of the Google/Motorola relationship and choose to defect to Windows; however, Experton Group believes this will happen using a dual vendor strategy unless Microsoft is willing to provide significant compensation.