With its acquisition of Motorola Mobility, Google clearly is signaling its intent to become a major player in the lucrative mobile device market. But will the deal help or hinder the Android operating system? How significant are Motorola’s patents? And can enterprises expect better security features in future Android iterations?
A good move for Android
Wireless industry analysts generally agree that the Motorola acquisition is a good move for Android. In its report “Smart Buy for Smartphones: Google Buys Motorola Mobility,” Yankee Group
maintains that the deal could fuel Android’s growth past the 6% its July 2011 consumer survey respondents expect over the next two years.
“Today 24% of employees are using Android phones and 41% are considering Android. I think the acquisition helps to at least underscore that Android will remain in the top three OSes for consideration in the enterprise, says Denise Lund, senior analyst, Yankee Group.
“Enterprise buyers can be more confident that apps on Android devices will provide a more consistent experience because Google owns the handset and software platform,” she continues. “Certainly Motorola has a well-known brand in the enterprise, and that brand gives credibility to Google.”
But the big question is: how are non-Motorola vendors affected? Peter Crocker, founder of and principal analyst for Smith's Point Analytics
, says, “While Google says it’s just buying Motorola for the intellectual property, I’m not sure I buy that. If Google plans on continuing to launch Google-branded phones, why would you outsource it to Samsung or HTC?
“Google management says there will be no changes to the Nexus [smartphone] program and manufacturing partners will bid competitively for the project but I would think that a partner that you own and can freely share IP with will have a significant advantage over others,” Crocker continues.
’s Stephen Drake, program vice president, mobility and telecom, agrees. “Google would be dumb to shoot itself in the foot with alienating the other three major original equipment manufacturers,” he says. “With the acquisition, there’s the opportunity to have better integration of hardware and software. If you look at the past success of RIM and Apple—owners of both hard- and software—Google will be looking to leverage that ownership and those assets to overall offer up a better product.”
Yankee Group offers a similar assessment. “With Motorola’s smartphone and tablet manufacturing within the Googleplex, Google can ensure pure implementations of its latest and greatest technology make their way into users’ hands, guaranteeing limited fragmentation to the Android Market developer base and prospects,” Carl Howe, research director, consumer research group, writes in the Yankee Group report.
The Motorola acquisition gives Google access to thousands of patents—and a stronger position in litigation. According to the Yankee Group report, Google owned just 576 patents as of January 2011; the deal brings 17,000 additional patents into its fold. And Motorola has roughly 6,500 more patents pending, according to Drake. “The patent set is critical,” he adds. “These patents could help in lawsuits from competitors. There is a lot of ammunition in that large family of patents.”
Indeed, competitors filed 37 patent lawsuits against Google in 2010 alone, according to the Yankee Group report. Having these patents will help to ease Android manufacturers’ concerns about litigation. “Android no longer will enter into court battles feeling like it has brought a couple of knives to a war being fought with machine guns and bazookas,” Howe writes in the Yankee Group report.
A more enterprise-friendly Android?
There’s no consensus yet on whether Google and Motorola will focus on enhancing the enterprise-friendly features of their flavor of Android.
According to Crocker, “The Android operating system security will probably not change but I bet that ‘Googlerola’ Android phones will be more secure than phones from OEMs.”
Denise Lund, senior analyst, Yankee Group, disagrees. “Having the software and handset owned by the same vendor should naturally tighten up that security,” she says.
“The last few revisions of Android haven’t focused on the enterprise much,” adds Drake. “We’ve talked to CIOs who said Android isn’t secure enough for the enterprise, so that’s a big barrier to entry. That’s why people are going with third-party mobile device management providers.” However, Motorola bought 3LM, an Android-specific mobile device management vendor, earlier this year, demonstrating its seriousness about creating enterprise-friendly features on Android devices.
“There are baseline elements that need to be there for enterprises to feel secure about deploying these phones,” Drake continues. So far, malicious applications in the Android Market have only affected consumers, “but what if that trickles into the enterprise? That becomes troubling to enterprises when they start thinking about deploying Android devices,” he adds.
“We think Motorola has the potential to have some influence on Google in terms of Ready for Business,” says Drake, referring to the software suite that targets IT mobile management concerns, “and to take some components that already exist and make the next versions even better for enterprise.”
Yankee Group sees the deal as helping enterprises feel better about their Android investments. “Enterprises will see their adoption risk decline,” Howe writes in the Yankee Group report. “Enterprises are already anticipating a shift toward Android in the coming years, but they aren’t sure which platform vendors will be the best partners for their specific business needs.
“With Google producing a better end-to-end consumer experience and an Android gold standard platform, no one will get fired for buying Motorola and Android is assured a continued spot in the top three mobile OSes for the enterprise,” Howe continues.
“An IT manager can't sign a contract today with the company ‘Android’ to supply [his enterprise] with phones. He can sign a contract with Samsung or HTC, but they are Android licensees and may change their corporate strategy as needed,” says Howe. “In fact, there's been a lot of discussion lately that HTC may in fact give up on Android to avoid patent litigation.
“With Motorola in the Google camp, though, an IT manager can sign a contract with Motorola, knowing that because Google owns them, it is unlikely to go out and switch to Bada or Windows Mobile. It reduces the risk of betting on a smartphone vendor who is going to change their spots in the near future,” Howe adds.
Producing a threat to iPad
Crocker sees the deal as significant for the tablet landscape. “Today the tablet market is dominated by Apple but a redesigned tablet from ‘Googlerola’ that has tight hardware-software integration and could potentially be subsidized by ad revenue will provide significant competition,” he explains.
Drake agrees. “There’s no question there’s space for a leading tablet in the Android environment. Given that Android is number one in the smartphone space, it needs to offer a compelling tablet.”
The consolidation craze
The Google-Motorola deal has driven speculation that other mobile mergers and acquisitions may be on the horizon. Will the wireless landscape be drastically different in two years?
Crocker has many theories. “I think a Microsoft/Nokia merger may be too cumbersome but surely the two companies can become much tighter in the future. Microsoft might sell some of its handset division to Nokia.
“Research in Motion already has tight hardware-software integration; its problem is innovation, and acquisition from a company like Dell certainly does not help solve this problem,” he continues. “If anything, I could see Facebook buying RIM.”