Google’s Purchase Of Motorola May Signal Trend In The Smartphone Market

Google’s Purchase Of Motorola May Signal Trend In The Smartphone Market

Brent Randall is a JD candidate at the University of Ottawa.

On August 15, 2011, Google announced that it would be acquiring Motorola Mobility which will enhance the capabilities of their Android operating system for smartphones.  While the purchase of Motorola gives Google the ability to produce hardware optimised for their software, commentators have wondered what this new development may mean for the future of communications.

Google’s acquisition of Motorola has come just over a month after the search engine-turned-tech-giant lost the auction for Nortel’s patent portfolio to a group of bidders including Apple, Microsoft, Research In Motion and Sony (see here for an IPilogue article on the auction and see here for an IPilogue article regarding the fate of the patents).  Although the acquisition of Motorola allows Google to better optimize its Android for those particular smartphones, in terms of software and hardware compatibility, Google stressed in its press release that it is still “firmly committed to Android as an open platform and a vibrant open source community.”

While Google could have decided to restrict Android to Motorola hardware to maintain consistent performance, much like Apple does with its computers, it has instead opted to be more like Microsoft personal computers (PCs), allowing other manufacturers to use their software.  A recent article on The Economist noted this similarity, and considered how the battle for the biggest piece of the mobile market compares with the way the personal computer market developed.

A first key difference noted is that while the Microsoft Windows operating system took off quickly to gain a huge share in the PC market, patent infringement lawsuits have made it harder for Android to do the same (interestingly, Microsoft has actually been one of the parties claiming that Android infringes their patents).  Despite the toll this has taken on Android, its global market share is still approaching 50%.  Allowing many different parties to integrate the Android operating system into their phones certainly has helped Google achieve this standing, however such expansion can be a double-edged sword.  While Android reaches a range of consumers who purchase smartphones from companies like LG, Samsung, HTC, Sony Ericsson, and now Motorola, some feel that the operating system has sacrificed security and privacy for such widespread compatibility.

A second difference between the current mobile industry and past PC development is that there will be more vertical integration, as Google now owns a producer of hardware to run Android.  Apple is well known for this, as their computers and “i devices” such as the iPod, iPad, and now iPhone, have been solely manufactured by their company, and run their own operating system.  Working with only one piece of hardware and only one operating system allows Apple to focus more of its resources on optimizing the way the two interact.  Google can now achieve similar optimization between Motorola phones and Android, but still maintain compatibility with other large manufacturers.  There have been rumours that other companies may follow Google’s lead – such as Samsung (in purchasing HP’s WebOS) and Microsoft (in purchasing Nokia) –in order to cover more of its production bases.  All of these developments show that vertical integration will be a continuing trend in the communications industry.

This trend toward vertical integration leads to the third difference that The Economist notes between mobile communications and computers: no one company is likely to dominate the market quite like Microsoft dominated the PC market.  Having already secured the intellectual property of Nortel and Motorola, the big names in technology may be looking for partners with whom to strengthen their mobile business.  Along with the previous rumours involving Samsung, HP, Microsoft, and Nokia, some are wondering why Amazon doesn’t purchase a company like Sony Ericsson to get in on the market.

With so many companies stocking up on their smartphone IP in the past couple months, it seems that others who still want to compete in the market will be required to follow suit.  As these companies pool their resources together, it looks as though the battle lines for dominance of the mobile market are in the process of being drawn.