Is Google’s buyout of Motorola Mobility a huge gamble?

Motorola’s name is not one that would have been top of mind for those of us in the mobile market, that was until yesterday when the announcement was made that Google would be buying the mobile phone division of the business, Motorola Mobility.

What was the main driver behind this purchase? Could the reason be the 24,500 patents Motorola hold? Are Google squaring up and taking the fight for mobile dominance to Apple, or could this be a direct response to the possibility that Microsoft were going to buy Nokia following their partnership announcement? We all have our theories but one thing is sure, Google are taking a gamble.

Motorola devices currently run Android so nothing dramatically will change there, the challenge for Google is finding a fine balance to satisfy existing partners as well as leveraging its new purchase to maximise the company’s share of the mobile market.

Much of Google’s current success in the mobile market can be credited to its route to market where it offers its operating system Android as a free OEM, this has many advantages such as reaching a wider audience, allowing for the market to be flooded with devices running Android, this method contributed to nearly half of all smartphones shipped in Q2 running off Android.

As covered in my mobile landscape series, I discussed the mobile offerings of RIM and Google as well as Apple and Microsoft, one point that I laboured is that Microsoft and Google only provide software and the hardware is developed by an alternative party. I see this as a slight disadvantage compared to RIM and Apple who have greater control of the overall product quality that the end users experience.

This of course could all change in the future, as integration between hardware and software is something Android now has available and could now offer a true like for like comparison against the offerings of Apple and RIM. Could this move by Google encourage existing partners to look at alternative options such as Microsoft?

After the announcement the Google share price dropped slightly (dropping 1.16 per cent as mentioned towards the end of this article) but I don’t believe too much can be read in to this as the buyout is more focused around creating a competitive advantage.

Overall I see this as a positive move by Google to sustain their share in the market, although their share may fall slightly in the short term I can see the product quality increasing and along with it Google’s market share.

This of course is one more element to throw in to the mix for the highly unpredictably mobile market, like a lot of developments within the mobile space, the outcome of success or failure could be predicted by the flip of a coin. If I was a betting man, I would place my money on this not being the last takeover story in 2011 for a major giant in the mobile space.

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David Akka is Managing Director at Magic Software Enterprises UK. David is a successful executive manager with a proven track record as a general manager with a strong background in sales, marketing, business development and operations. Past experience in technology and service delivery include both UK and European responsibilities.