Did somebody forget to remind Google that August is supposed to be a slow news month? At 7:35 this morning, the Mountain View, Calif., company announced in a blog post by CEO Larry Page that it had agreed to pay about $12.5 billion for Motorola Mobility.
The sum involved alone sets this apart from the average tech merger. So do the relationships that would be upended by Google’s planned purchase of the consumer-oriented half of Motorola spun off in January. (Also unusual compared to other mega-mergers: How nobody leaked the news in advance.)
The reactions I’ve been reading this morning have fallen into three broad categories.
What does this mean for other Android phone vendors?
Motorola wasn’t the first company to ship a phone running Android, so it’s a little awkward to see Google bring it in-house while saying it will continue to license Android to such competing firms as HTC, LG and Samsung. That’s not how things usually work; normally, the operating-system developer either keeps the hardware business to itself (Apple) or lets other companies mess with circuit boards and batteries (Microsoft). There aren’t many cases of an OS vendor both shipping its own devices and licensing its software to competitors–although Palm did this for a while during the Palm OS’s heyday a decade ago, when Sony, Symbol and Handspring also shipped handheld organizers running its software.
The comical conformity of the supportive quotes from HTC, LG, Samsung and Sony Ericsson executives that Google trotted out this morning adds to the weirdness here. Veteran tech observer Dan Gillmor (like me, a former newspaper columnist) suggested that HTC and Samsung must be “absolutely furious.” But if Google uses its control of Motorola to strip out the bloatware that has gummed up too many Android phones, consumers may not mind. (Here’s a tip for Android phone manufacturers: Instead of wasting your time on proprietary software add-ons, get your developers and engineers working on battery life–the single weakest aspect of Android relative to other smartphone operating systems.)
Google says it will run Motorola Mobility as a separate shop, but AllThingsD’s Ina Fried and others have already suggested that it might do better to flip the company’s hardware business.
What about the non-phone half of Motorola Mobility?
Contrary to the “Mobility” moniker, this firm also makes cable boxes–a category of hardware both widely resented by consumers and one of the bigger obstacles to Google’s Google TV project. Commentators such as Tech.pinions’ Steve Wildstom, ZatzNotFunny’s Mari Silbey and GigaOM’s Ryan Lawler and Ryan Kim have all noted this morning that Google will now be in a position to ship a cable box with Google TV software built in–well, if the cable companies don’t mind shipping hardware that puts YouTube and other non-cable video services front and center on the subscribers’ TVs.
To me, this is the biggest reason for optimism about this deal.
What about the patents?
And here we have the most depressing aspect of this transaction–Google needs a stash of patents to defend Android against all the mobile-device patent lawsuits flying around. Motorola Mobility has 17,000 or so, and by gaining control of them Google can then threaten such opposing litigants as Apple and Microsoft with its own patent lawsuits–then propose to settle these fights with cross-licensing deals that extinguish the litigation but will do almost nothing to improve the products in question.
As the New Yorker’s Nicholas Thompson notes in a post this morning, this demonstrates how badly the patent system has failed to promote innovation:
Meanwhile, customers and shareholders will pay for the lawyers. And engineers will spend too much time worrying about violating someone else’s patents, and not enough time figuring out how to build the next magical thing.
He’s right. Suppose we didn’t have this overhang of too-obvious tech patents that should not have been issued in the first place; can’t you think of more productive uses for $12.5 billion than procuring an extra layer of legal armor?
Rob Pegoraro 
At first I thought “The lawsuits are going to be Epic.” They still might. Steve Jobs must be freaking out.
Many technologies seem to develop triumvirates. The “Big Three” effect, if you will. Apple is hardware+software, and Google is now hardware+software. Microsoft is going to be pressured to buy Nokia, I think.
“Suppose….” Yes, we’d all be better off if attorneys hadn’t figured a way to enrich themselves and stultify innovation using the patent laws. But Google doesn’t operate in ‘Supposistan.’ So they’re spending money that would be better spent elsewhere. Perhaps they could also spend some of their lobbying bucks to put a damper of intellectual property abuse.