Google's $12.5-billion Motorola buy: 7 predictions

The search giant has rocked the tech world with a huge deal to acquire the mobile-phone hardware manufacturer. Should Apple be scared?

A Motorola Xoom tablet
(Image credit: Justin Sullivan/Getty Images)

In a move that stunned the the tech industry, Google announced plans Monday to buy Motorola Mobility, a cellphone and tablet manufacturer, for $12.5 billion — Google's biggest acquisition ever and a 63 percent premium on Motorola's closing share price Friday. The acquisition, provided it gains regulatory approval, will "supercharge the entire Android ecosystem," Google CEO Larry Page said in blog post. What will the deal, and a supercharged Android, mean for the tech world?

1. The mobile race will get even hotter

"One thing is clear," says Dan Lyons at The Daily Beast. "The war over the future of the mobile-phone market is ratcheting up in a big way. And Google has made it clear that it will pay any price to stay on top." The move to mobile computing and smartphones is the "biggest wave in the history of computing," and Google is intent on being the market leader. Who knows what Apple and Microsoft are thinking, but "the price of staying in this market just got a lot higher."

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2. It will help Google win the patent wars

Analysts are wondering if Google's "largest takeover was also its most defensive," says Josh Halliday at The Guardian. The company is spending $12.5 billion to buy 17,000 mobile patents — that's a "treasure chest of intellectual property" to help keep Google out of court, or at least be used as bargaining chips. The Android OS and Android devices have been plagued by legal issues, from a multi-billion dollar lawsuit brought on by Oracle to complaints filed by Apple and Microsoft in what Google legal eagle David Drummond has called a "hostile, organized campaign against the company." Buying Motorola might not help Google in lawsuits that are already underway, but it would help the company ward off future legal challenges.

3. It will be good for customers

With its Droid line of smartphones, Motorola has already been manufacturing some of the most popular Android devices. "Google's ownership of the manufacturer will mean a smoother experience, fewer glitches with new releases and a more seamless integration between hardware and software," says Will Stofega, a mobile-industry analyst, as quoted in the San Jose Mercury News. "This all adds up to a better experience for the user."

4. It will alienate other Android partners

Google insists that it will run Motorola Mobility as a separate company and that the acquisition won't affect other companies that manufacture Android devices and compete with Motorola, like Samsung and Sony Ericsson, but I don't buy it, says Chloe Albanesius at PC Mag. Google's other Android partners are putting on a happy face, but they've got to be seething. Yeah, "in a sense, Google's deal dares its [other] partners to sever ties with Android... and forge a new relationship with Microsoft," says Mark Hachman at PC Mag. "It's hard to believe that some won't."

5. It won't hurt Apple

Stock watchers say the deal shouldn't have much impact on Apple, says Neil Hughes at AppleInsider. "While Android adoption is outpacing [Apple's] iOS, both platforms are share gainers," writes analyst Gene Muster in a note to investors quoted in the article. "This confirms our belief that unlike desktops, there will be two or three winners in mobile (iOS and Android and possibly Microsoft)."

6. It will save the Google TV

Buying Motorola Mobility, a leader in set-top boxes, could help salvage the troubled Google TV, says Ryan Lawler and Ryan Kim at GigaOm. Google TV has thus far been a flop, but Motorola could give it the scale, industry relationships, and credibility it needs to succeed. "But to make that happen, Google TV will need to shift its positioning from an operating system that is sold to consumers to one that will be used by a number of pay TV operators [like Time Warner Cable and Cablevision] instead." Yes, if cable companies agreed to let Google in and provide the operating system for their boxes, rather than using their typically terrible software, Google could make Motorola a sort of "super-TiVo," says Tim Carmody at CNN. "If you're placing bets on who will be the first to truly open up internet TV, the smart money now has to be on Google."

7. It will be a total trainwreck

"Unless Google quickly sells off Motorola's hardware businesses [but retains the valuable patents], the deal will be a colossal disaster," says Henry Blodget at Business Insider. "Google has no idea how to run a global hardware manufacturing business," and it's likely Motorola will quickly run into problems and drag Google down with it. "It's not inconceivable that it will end up the same way the disastrous AOL Time Warner merger did: With a quiet spin-off after years' worth of value destruction."

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