April 11, 2012 | by Andrew Kameka
Imagine you bought something very expensive and then decided to sell it before you ever really had a chance to take it for a spin. That’s what Google is supposedly considering according to the Wall Street Journal. But unlike the product you and I are likely to buy and sell months later, which would be in the hundreds or thousands, Google’s purchase would be in the billions. Yes, billions.
Dennis Berman writes in the Wall Street Journal that Google is unsure of what step it will take with Motorola, the “once-great, now-faltering” company Google acquired last August for $12 billion. The deal was originally viewed as a patent grab in order to better protect Android smartphone makers, but it also raised issues about how the same manufacturers Google sought to protect would feel knowing that Android’s chief organizer now had its own horse in the race.
Berman suggests that Google doesn’t want to create problems with its Android partners and will look to offload the Motorola hardware division as a result. He says “From Asia, rumors have swirled around the handset business, suggesting that Google has already offered it to China’s Huawei at a high price.”
This is the first I’ve ever heard of such rumors, but the Wall Street Journal usually gets the benefit of the doubt because it has a mostly favorable track record. Perhaps the thinking is that Google could sell Motorola’s handset division – factories and day-to-day operations included – to Huawei, a deep-pocketed Chinese manufacturer, and retain Motorola’s patent portfolio. This would give Google a chance to recoup some of the acquisition costs, keep its patents, and get out of the phone making business that might be profitable in a few years.
However, I have a hard time subscribing to that line of thought. As big as Huawei may be, I’m not sure it might want to purchase Motorola’s massive infrastructure, especially when it already has more than enough power to create and produce phones on its own. It’s being doing that for a long time creating carrier-branded phones.
You probably didn’t know that, and that’s precisely the problem. Huawei wants consumers to know the name Huawei, and it has been working hard to introduce top of the line products to raise awareness in the western world. Look at the companies actions in the past year and it’s clear that Huawei no longer wishes to be just a manufacturer. It wants to be a brand with notoriety. Purchasing Motorola wouldn’t aid that process with consumers; it would just pass on the Motorola brand to a Chinese company. And with all due respect to Motorola, the company is not worth much in name alone. Any purchase by Huawei seems unlikely unless it includes those patents – especially when you consider that Huawei could be a target for litigation from Microsoft.
Nothing in tech surprises me anymore, so what if Google really has considered selling Motorola’s handset division to Huawei? Would it be a wise or foolish move?
In the short term, it would please investors who don’t like the idea of Google being in such a competitive industry dominated by Samsung and Apple.
It would also ease concerns about Google’s involvement in Motorola threatening its position as a software provider to many of today’s top phones.
But Google typically doesn’t do things for the short term, and Motorola could be a long-term safety net to maintain Android, says Berman. (Read his full thoughts why here.)
Motorola will continue operate independently according to all on-the-record statements from Google, but things could change in the future. I’m sure the folks at Google will be able to encourage certain moves once they do. Yes, it’s risky to remain in the business, but a hands-on approach with Motorola might prove valuable for furthering Android as intended, something not possible under the current ecosystem.
CEO Larry Page said last year that company is putting more wood behind fewer arrows, but couldn’t it stand to keep Motorola in the quiver for that reason?