Many people believe that Google's purchase of Motorola Mobility in 2011 was overpriced and ineffective. Buying Motorola, however, turned out to be an extremely worthwhile purchase, as it allowed Google to lock in a partnership with Samsung all while gaining patents and resources.
Samsung was the premier ship that carried the Android platform. About 80% of the marketshare for Android came from Samsung devices but Samsung had other plans in mind. Despite using the Android operating system, Samsung started to develop their own apps and slowly started replacing the Android apps with their own. Google feared that eventually, Samsung would remove Android altogether and without prominent hardware in the market, Google would lose an incredible amount of money. To counteract this, Google made a hefty purchase of Motorola for $12.5B. With Motorola, Google acquired tens of thousands of patents that they used as leverage against Samsung.
In addition to litigation, Google also acquired all the Motorola facilities and began working on the Moto X and Moto G. Now that Google was able to make successful phones, it showed Samsung and other companies that they did not need other phones to carry their OS.
Samsung had no choice but to settle with Google. In late January, they signed a 10 year deal with Google that would prevent Samsung from continuing to replace the Android OS. Within two days, Google was already on its way to selling Motorola to Lenovo. Clearly, Google had one intention when it came to Motorola and once that dispute was settled, sold it right off.
I also agree with your analysis. Before, I thought the price that Google paid for was overpriced. But it turns out it's not. Again, they managed to buy the patents at price that they might have wanted. It seems to be that the patents that they bought for $5 billion were reasonable to many analysts, when calculating all the profits made by selling Motorola and its business. The coalition by Google and Samsung was interesting too, but believable. Samsung needs Google, or else, they won't be able to make competitive phones.
ReplyDeleteIt is interesting to hear that the purchase of Motorola may have been used as leverage against Samsung. It is a pretty smart move by Google, which probably may have made Samsung sign the collaborative deal.
ReplyDeleteSamsung may have initially used the Android to raise their prominence in the world and build their reputation, thus promising a likelier success with their own OS. Unfortunately for them, this plan has to be halted.
Nevertheless, it may also allow Samsung to continue its success streak, as it may possibly fail badly with its own OS too. The consumers might grow tired and weary with the entrance of a new OS in the market, which may have been why the Windows Phone never picked up.
The whole Motorola saga may just turn out to be a win-win situation for Google and its Android partners.