Googorola

Or was he too shy? Is she really going out? Different songs? Yeah? I know that was one written by Shulas Joe Jackson. That's a lie. It was a hit. Oh boy. All right, Let's let's move on to our topic, shall we, before we this really falls apart. Okay, So we wanted to talk today about Google Goal and it's planned acquisition of Motorola Mobility and and what that means and why Google would be considering it, and uh, kind of just sort of look at the topic and talk

around it. It's kind of interesting because this this was first announced in August of eleven August to be exact, and typically August tends to be a slow month in tech news, but the August of twenty eleven was anything but. It started off like any typical August in the tech world, but within the second week things just went out of control, crazy bananas and Google Motorola was one of the big stories,

or so we thought. Other stories later eclipsed it. But let's let's kind of talk about this and the The details of the deal here are that Google would be paying around forty dollars per share in Motorola stock, which is an increase of around six of the value at the time of the announcement. Yeah, about twelve point five billion dollars billion with a B y. Yeah, that's a that's a lot of money. And keep in mind, well, why would Google want to buy Motorola Mobility? What are

some of the reasons? Okay, well, to start off with, I mean, it's not like Google buying companies is unheard of. Google's got long history of doing that, right, but typically it's there are they are purchasing companies that the that Google can turn into something else, like for example, when they bought Rightly. Rightly was an online word processing UH software that you used in your web browser, which became part of Google Docs. Yeah, it's kind of more service

oriented than hardware oriented. That's really what Google was focusing on, or advertising giants. Sure, which feeds directly into Google's line of revenue, makes sense, you know, it's Google Products Services exactly. Um, But with Google purchasing Motorola Mobility, motor Motorola Mobility was a a fairly recent spinoff of Motorola, which has been around for a long long time. And Motorola was the

company that invented the cell phone. The very first cell phone was a huge cell phone by Motorola that wasn't It wasn't meant for consumers, it was a prototype and uh and famously, the the head of Motorola at the time, made a call to uh I think it was Bell Labs from the street out in front of Bell Labs his office in order to kind of rub their nose in the fact that that Motorola had built the first

cell phone. I believe the words that they used as they were waving up to the person in the office of Bell Labs was you who Yeah it was, which you can also translate into nanny nanni boo boo yes. And then the the six trucks it took to carry the phone right drove off. It wasn't quite that big, but it was. It was rather clunky. So anyway, Motorola definitely has a long history, well even longer than that. Remember Motorola CB radios in the nineties seventies. They predate

that by by quite a few years. So it's Motorole has been around for quite some time. But they're known for making things physical things, and Google is typically not. I mean, even when it came out with the the NEXTUS one cell phone, the hardware for that was not made by Google, it was made by HTC. So, uh, the question is why would they do that? And the first reason this is this is one of the cool things, you know, a tech stuff. We don't usually cover breaking

tech news. I mean, you might mention something on the blog, but when we actually get to it in a podcast, we've had a chance for the news and commentary to develop on it somewhat. So the initial news was Google bought Motorola Mobility because it had thousands and thousands of patents um And this has been in the news a lot lately to where Google and Microsoft and Apple and HTC have all been going at one another on who's

violating whose patents and Google doesn't have a lot of patents. Yeah, and and to be to be clear, to be clear, Google was kind of outside of these arguments. I mean, they were directly involved in the sense that the arguments had a lot to do with the Android operating system, but the actual lawsuits did not target Google. They targeted the hardware manufacturers that we're using Android operating system. Google

is uh is not a bit player in this. They have a big steak in the outcome of these arguments, right, so Google definitely has a lot to lose if the arguments go against the manufacturers, but they didn't have really much recourse to act out against these lawsuits because they weren't the ones named in the lawsuit. And so Google.

Google's move to purchase Motorola Mobility might have been fueled in part with this desire to get hold of these thousands of patents so that the company could protect itself against UH patent lawsuits, patent infringement lawsuits. And the way you put protect yourself against the lawsuit isn't that you prove that your idea is original or that you have the patent on whatever idea it is. That's that's at stake.

It's to say, if you sue me for infringing on this idea, then I can sue you for infringing on these ideas. And it becomes this thing where it's almost like the Cold War, right, It's where these different companies are building up arsenals, except their arsenals aren't weapons. They are patents, patent portfolios. And it protects them because they know that if another company tries to sue them, they

can countersue, and it makes the whole thing counterproductive. So you're more likely to reach an agreement with another major company where perhaps you agree to license the technology across both companies for multiple companies. If there's more than that involved in a lawsuit. Yeah, and it it uh sometimes works out where people are sort of exchanging, you know,

making exchange. So I'm licensing these patents. You know, for every one of these I make, I'll give you ten dollars for these patents, And for every one of these I make, you give me twelve dollars for those patents, and we'll just call it a day. Um. The thing is a patent is basically a protection of intellectual property, and it's on file with some patent office somewhere. You know, a lot of times ideas will be patented in Europe and in the United States and in you know, different countries.

So um, you know, they're these are high stakes games that people are playing. But that's only the first I would I would say that was the first obvious thing. The other obvious thing is that Google is making the Android operating system, and Motorola with the droid UM and several other Zoom Zoom the tablet. Yeah, um was making devices. So until this point, the Android operating system was free for multiple uh uh companies to o e M companies

to license from them. So you have people like HTC, You've got Samsung, um LG, Motorola licensing the Android operating system for use on their handsets, and that's helped Android gain one of the biggest market shares, crazy market share, like over the course of a very short time. Yeah it. Even though the iPhone debuted before Android, Android caught up to iPhone and got a wider distribution. And there are multiple reasons for that. For one, unlike the iPhone, um

you know, iOS is only found on the iPhone. That's it. Well yeah, well, for for phones, for phones. It's also found on the tablets, the iPads. But I'm just waiting for someone to write in, I'm glad that you said that. Okay, so for but four phones, OS is only found on the iPhone. And you might be able to find different generations of an iPhone out on the market at any given time, depending upon when you go to the market. But they were all manufactured for Apple for Apple, and

it's just the iPhone line. If you wanted an Android phone, you have lots of different choices across multiple carriers. And remember, for a long time, iPhone was just stuck with not stuck. iPhone was only available on a T and T and then actually in the United States, and then eventually it was also available on Verizon and there are now rumors

that it will come to other carriers as well. But that limited the adoption rate of the iPhone as well, just because some people were locked into contracts with other carriers or they had they knew that the other carriers had better service in whatever area they lived in, and even though they might want an iPhone, it just wasn't practical based upon their particular situation. But because Android phones were available across multiple carriers, across multiple handsets. It gave

people a lot more choice. So there's no surprise that Android caught up in the marketplace and then started to go beyond everyone else, at least in the smartphone market. If you look at the cell phone market overall, then Android is not the dominant operating system, but in the smartphone the branch of the cell phone market, Android's winning right. And so all of a sudden, now Google owns one of the manufacturers to whom it was licensing the its software.

And now, well, of course I haven't actually heard any of the other manufacturers say anything. Most of them. Most of the comments from the other manufacturers have been we and we trust that this is not going to in any way impact our relationship with Google. So so in other words, like HTC would say, yeah, Google's buying up a company that creates competing products with our products, but we trust that Google is not going to of them

preferential treatment and hurt us in the marketplace. And you know, you could say, well, that's probably lip service that you know, what else is HTC going to say? But I've read some good arguments that this could very well be the case, meaning mostly because if you look at all the different handsets that hold or in products that have Android operating

system on it. Motorola Mobility consists of around roughly of all the products that have Android on them, which means you have eighty five of the products that have Android on them are made by other manufacturers. So why would Google endanger the relationship with eight of what of the products out there that run Android? Why would Google put

that at risk? If they were to give preferential treatment to one uh one company over everything else, it would It doesn't make sense from a numbers perspective, right from business perspective. And also we should say that Larry Page, who is co founder and the CEO of Google said, uh this this is an excerpt of a quote. We will create amazing user experiences that supercharged the entire Android

ecosystem for the benefit of consumers, partners, and developers. I look forward to welcoming Motorolan's to our family of Googlers. And I guess the idea here is that you take the hardware expertise from Motorola, and you take the the the systems expertise from Google, and you work with those to try and create new systems that would be uh ideal for Android users, but not necessarily try and keep

that just to Motorola. It might be that again that Google makes patents on these things and licenses out to other manufacturers, so that you might have Google and Motorola coming up with these new ideas, new ways to implement the operating system in a really innovative way, but they wouldn't be kept just to Motorola products. But so yeah,

that was that was what. Those were the two big things that I that I saw in the days immediately following than the news of this deal were oh, my gosh, look at all the patents they've got, and we really are talking about thousands and thousands, and there are thousands of other patents that have been submitted but haven't been ruled on yet, so they haven't been issued or declined. So there there could be even more of the works.

And in fact, I've heard that it's possible that Google doesn't even know everything that's in that portfolio, but you know, they were buying it for the intellectual property, and oh my gosh, what happens with all these other manufacturers. Some say that they think that people like Samsung and HTC

might look again at Windows Phone seven. Um, yeah, I've actually heard that Microsoft may receive a shot in the arm because Windows Phone seven, despite critical acclaim, has been flagging in the market place, and so this might give them a uh, give other manufacturers and impetus to to take a look again at the operating system and hey, maybe we should create more Windows Phone right because because the philosophy is, despite what Google saying, how can how

can it even be possible that the Motorola phones with the Google operating system that we're all, you know, everything that was developed within Google was developed with these phones possibly in mind? How can we compete against that? I mean, if I'm if I'm out in the market to buy an Android phone, and I know that Google owns Motorola Mobility.

Even if Motorole Motorola Mobility remains it's as independent as it possibly can be under the umbrella of Google, I'm tempted to buy Motorola because I would logically, I would think anything that Google does that's innovative is going to be aimed at this particular kind of hardware over the

other kinds. Even if that's not true, that's gonna be what's in my mind, Well, there are a lot of people who aim for the Nexus is because they think they're going to get the upbring system build before anyone else does. Yeah, the Nexus, the Nexus one, the original, and then the NEXTUS which is Samsung's and a lot of people say, well, these these are the phones that

are designed to be the pure Android experience. Google has said that they were going to give out the all the builds that the phone can handle, so nobody's gonna hold anything back. Because some of the other manufacturers have have messed around with the operating system and they say, well, it's not the same. Like HTC is known for its HTC sense Um modifications the operating system, Motorola actually has Moto blur Um and UH and both of them have

their fans and attractors. Um they say, well, you know, HTC is not gonna give me the update from my phone, and I really want that, so I'm gonna make sure I get the next or you know, the same thing for all of them. I've I've heard complaints about all of the different manufacturers because they say, well, they're so intent on creating this experience on top of Android, and

I just want the pure Android garnet. It's kind of funny because the day that we're recording this is the day that I got the heat Gingerbread update to my Android phone. Uh so yeah, I mean, and Gingerbread has been out for a long long time. For you people in the future who are listening to this podcast, it's not that uh gingerbread is is fresh out of the oven. It's been available on other devices for a while. I just got it as of September two. Um. Anyway, but

I'm sorry, go ahead, no, no no, no, go ahead. I was going to say that that one of the arguments I would use against the people who say this was purely a patent grab is that, well, first of all, it looks like a lot of those patents that Motorola has wouldn't necessarily be useful in patent lawsuits. It's they wouldn't necessarily be that valuable. Uh. In that case, some

of them probably are, but not all of them. And it and it may very well be that most of them aren't terribly useful for the whole patent lawsuit warfare strategy. But another reason is because Google was part of a bidding war for another group of patents from Nortel, which ended up being a four point five billion dollar package of O patents, and Google did decided not to continue to bid on that and and pass that chance up. But then they spend twelve point five billion on Motorola Mobility.

So you could either say, well, perhaps they view that the patents that Motorola holds more valuable and more relevant than the patents that Nortel held, or they could be saying, well, no, this really is because we want to have a platform to work with when we're developing Android, not just the

patents that come along with it. Well, it seems like um now, I actually, uh, the best article I've found on all these different pieces of fallout was from Renee A. Riccio of inc. It was a long time tech journalist, and she she was pointing out too that Nokia also, uh might receive a shot in the arm from this, because there's been a long time, Uh there's been a rumor going on for a long time that Microsoft might

want to pick up Nokia. UM, and this just makes it all the more possible that somebody might gobble up Nokia, which has been around for a very very long time, also has done a lot of innovation, UM not not as visible here in the United States. UM. But you know, they've had a lot of phones over the past using the Symbian operating system and so there might be an opportunity there. Um also Research in Motion, she suggested, as a possible take over our target. Research in Motion is

hop ping this will turn things around. Research in Motion, as of the recording of this podcasts, has had a few rough quarters. Putting it lightly yep. Yeah, And you have to remember Research Emotion was once the dominant company in the smartphone market in the United States in particular, like that was the one that all the executives would go for. You would hear the story about the Crackberries, where executives were addicted to using the smartphone because it

was so compelling. Well, that was before it the smartphone had really started to creep into the consumer market. It was definitely before Steve Jobs had introduced the iPhone, which opened up the floodgates. Um. And of course for a while it was the enterprise security level kept BlackBerry in its position, right, Yeah, because everything is encrypted and it's

all passing through specific servers owned by RIM. Although that did cause some problems in various industries because RIM is a Canadian company and if you're talking about the United States company. Uh, some executives and some I T professionals a little nervous about the fact that their information was passing through the servers in a different country. But rem has built a reputation on being reliable and encrypted and safe,

so it was able to move beyond that. In most cases, I would say, you know who else is benefiting or might benefit if Google standardized more on the Motorola hardware platform. What's developers? And I'll only say that once because I'm not Steve Bomber, right, Um, because the very thing. You know a lot of people who don't like Apple products because they're closed off and prefer Microsoft or Linux or

for phones Android. Um, they like the fact that these things are open, that they have multiple marketplaces, multiple options to buy their software from. They say it's more open. But the thing that it's two sided coin, right. Yeah.

The challenge is the fact that there are so many different variations of Android out on the market that developing in an appu means that you either have to make it as general as possible to hit as many of those operating systems, and to work properly on as many of those operating systems as possible, or you just right off a percentage of your of your potential audience and develop for the latest operating system or the latest couple

of versions of that operating system, because Google does release updates to Android and the you know, you want to develop for the newest version of whatever the operating system is, because that's probably going to give you the most advanced features. It's going to give you access to the resources that

you want to make a truly compelling app. Well you you hope for that, Yeah, that's I mean, you could aim to create an app that is much more basic and and really goes after very simple elements of the operating system. Uh, and there's nothing wrong with that, But the temptation is of course to develop something that's really cutting edge that pushes the envelope. And so the problem is that Google doesn't have any control over which hand

sets and which carriers update the operating system. Like they don't have Google can't schedule that. Google can can release an update to the operating system, but it's up to the carriers to actually push that out to users. So you could be stuck with an Android phone that could be theoretically based on its hardware capable of running the latest operating system, but you're stuck a version or two versions or more behind the current one because the many

the carrier hasn't pushed that update out. So that means that as a developer, you have, instead of one operating system to develop for, you've got six different versions of that operating system to develop for. And if you want your app to be usable across all Android devices, you have to take that into account when you're building your app, So you can't build in those super cool futuristic features without leaving behind a good portion of the people who

own Android app um Android devices. So hopefully by purchasing Motorola Mobility, Google will have a little more control in UH and keeping a nice standard build of the operating system, and other hopefully carriers and and and handset manufacturers will follow suit and incorporate that into their devices so that

the experience is more level across the board. Now, if you own something that cannot run the latest version of that operating system because it just does not have the hardware necessary to do it, you're still going to be out of luck. But that's just like any other computer system. If I go out and buy an old old, old computer. It's not going to have the resources necessary to run a modern operating system like a current version of an operating system on it, because it's just it doesn't have

the horsepower. But that you know, that's the nature of technology. You just don't want to be left behind, seemingly arbitrarily knowing that your device could run this stuff but for some reason doesn't. That's really irritating, both from a consumer

perspective and a developer perspective. Yep UM. And then there were in the days that followed the initial freak outage of the the deal, the revel people just I think once they stopped, you know, thinking about what would happen with the other developers, they started thinking about the other stuff that Motorola Mobility does UM, part of which is it brings in a whole lot of money for Motorola or used to or won't won't soon will for Google um,

so it's another source of revenue UM. And in addition, they make stuff other than phones, like set top boxes for TVs, and this could be the next step in in implementing Google TV, yes, which has It's funny because I see reviews of Google TV people who have actually used it, and they tend to be fairly positive at least of the potential for Google TV. There's a lot of stuff that's holding Google TV back, and a lot of that has to do with content deals, which you know,

that's that's a whole different podcasts. But but the but the fact that they have a company now that produces set top boxes could mean that there's a tighter integration with that and we might see some pretty innovative UH home entertainment systems with Google technology built directly into them that we'll hit the market in the next few years.

And then there's UH in dash navigation systems for cars, although really, I mean smartphones are starting to really take a bite out of those, sure, but you could have greater integration if you had an Android phone and you had Android in your dash. Yeah. I can even see that becoming because even more complex where you start getting agreements with specific car manufacturers where that's built in, like it's not an aftermarket thing, but it's built in at

the very beginning. And so you go out and you buy your new car, and that car happens to have a Google Android system built into it. And if you happen to have an Android smartphone. Then you've got automatic

integration between those two. That means it's a very compelling device. Well, I mean this is an area in which Apple is not active, but Microsoft is um and this is I'm sure that just makes Microsoft even happier about the deal than they already weren't um you know, because this is this is a place where I I don't know that anybody else had the clout of a Microsoft. I think

it was you know, car by car Um. So this is this is gonna be scary because Google's got a lot of weight it can throw behind those um So, I mean there there's there's more to this deal than just the patents and just the effect of the on the manufacturers of phones. I mean this this really has some far reaching implications, and it might push Google's competitors

in in different ways. I've even seen suggestions that perhaps the Google Motorola acquisition could end up getting well it's going to get a lot of scrutiny, but it could potentially raise questions of antitrust laws and uh and that's a little tricky because you look at Google and you look at Motorole Mobility and at first blush these two companies don't seem to have a lot of overlapping uh areas of products. You know, it just doesn't seem like

it it would be that big a deal. But then you take into account the whole operating system for mobile devices, and if Google is targeted for antitrust, then the question is, well, how does that How is it possible for Apple to have its own line of products with its own operating system that is not available on anything else? How can

that be possible? But the Google Motorola acquisition isn't. And I mean it's just one of these conversations that spirals and spirals outward and you start to question why you even got up in the morning typical Friday for me. Really well now and it's just, um, you know, there's there. This is one of those onions of of news because there's just so many different layers to it. But not

the onion, not the onion, which would still be hilarious. Um, but yeah, I mean, this is it's fascinating stuff because this really does have some pretty far reaching implications of just the ones on the surface, and um, you know the rest of the world didn't necessarily latch onto them and immediately but I would bet that Google had some of this other stuff in mind when it completed the acquisition.

You know, there are lots and lots of things that that these two companies can do well together provided the merger goes through. A merger acquisition is allowed to proceed. So because it's not a done deal yet, no, we talked about almost like it is, but that's really this is an announcement, it's an intention, and everyone's reacting to it as if it's as if everything's been signed and sealed, But in truth, things may still fall apart for this deal.

We've seen some pretty major deals get some serious opposition recently in the news, so it wouldn't be a surprise to see that sort of at least the at least scrutiny towards the deal, if not opposition. So we'll have to keep our eyes on this and see how it develops. But really interesting discussion here. Not everything in technology is all based on circuitry and software and and electricity. Some of it's based on on corporate policy, CE and finance

and politics and property intellectual property. And I find this just as interesting to me as as you know, stuff that beeps. So, guys, if you have any suggestions for topics that we should tackle here on tech stuff, let us know. You can send us an email that addresses text stuff at how stuff works dot com, or drop us a line on Facebook or Twitter. Are handle there is text stuff H. S W and Chris and I

will talk to you again really soon. Be sure to check out our new video podcast, Stuff from the Future. Join how Stuff Work staff as we explore the most promising and perplexing possibilities of tomorrow. The house Stuff Works iPhone app has arrived. Download it today on iTunes, brought to you by the reinvented two thousand twelve camera. It's ready, are you