8ack ln 2004 Lrlc L SchmldL Lhen Coogles chlef execuLlve proclalmed Were noL golng lnLo Lhe phone

buslness buL were golng Lo make sure Coogle ls on Lhose phones

Less Lhan a year laLer however Coogle dld Lhe opposlLe

As SLeven Levy descrlbed ln hls book ln Lhe lex Coogle soon acqulred Androld Lhe moblle phone operaLlng
sysLem and began bulldlng a phone buslness LhaL lL has slnce developed lnLo a [uggernauL

Lven afLer Coogle acqulred Androld ln 2003 lL conLlnued Lo play down plans Lo enLer Lhe phone buslness for
several more years lL wasnL unLll Lhe summer of 2008 LhaL SLeven !obs aL Apple acLually Look noLlce and
wenL Lo Coogles headquarLers Lo lnspecL one of lLs proLoLype handseLs

Coogles dlverslonary LacLlcs made sense 8y 2006 SchmldL was an Apple board member and Coogle was
consldered an lmporLanL parLner Lo Apple 8uL when !obs flnally saw Coogles phone he was furlous and
concluded he was a vlcLlm of decelL accordlng Lo Levys accounL (SchmldL has sald he never mlsgulded
!obs)
1haL hlsLory may be lnsLrucLlve Lo conslder when [udglng Coogles $123 bllllon deal for MoLorola MoblllLy
whlch makes Androld phone handseLs and 1v seLLop boxes

Coogle ls acLlvely poslLlonlng Lhe deal noL as a means Lo buy lLs way lnLo Lhe handseL markeL buL as an
opporLunlLy Lo buy MoLorolas porLfollo of paLenLs some 17000 of Lhem

uurlng Lhe companys conference call wlLh analysLs and Lhe medla Coogle execuLlves peppered Lhe call wlLh
Lalk abouL Lhe enormous value of MoLorolas paLenLs (lL menLloned Lhls 24 Llmes) yeL Lhey Lalked abouL lLs
handseL buslness almosL as an afLerLhoughL

Coogles focus on Lhe paLenLs raLher Lhan Lhe handseL buslness makes almosL Loo much sense Coogles
Androld operaLlng sysLem has long been open and ls used by a large ecosysLem of handseL makers lncludlng
Samsung and P1C

1hese companles have lnvesLed bllllons of dollars ln lLs Androldbased operaLlons and helped make Androld
more popular Lhan Apples moblle operaLlng sysLem 1hose handseL makers wlll now have Lo compeLe agalnsL
Coogle

Coogle canL admlL ln publlc LhaL whaL Lhey lnLend Lo do ls evenLually make Androld proprleLary sald 1avls
McCourL an analysL aL Morgan keegan LqulLy 8esearch uesplLe Coogles proLesLaLlons McCourL says he
belleves LhaL ln Lwo Lo Lhree years afLer MoLorola lncreases lLs dlsLrlbuLlon channels ln Lurope where lL ls
weak compared Lo Samsung and oLhers Coogle wlll seek Lo sLarL closlng Androlds plaLform or begln bulldlng
speclal feaLures on lLs own phones LhaL are noL avallable Lo lLs parLners

And even Lhough Coogle could keep Androld as an open plaLform a speclal phone wlLh bells and whlsLles
could sLlll lnfurlaLe lLs currenL manufacLurlng parLners lor consumers however a proprleLary phone would
flnally make Coogles Androld sysLem verLlcally lnLegraLed creaLlng an endLoend sysLem LhaL may allow lL Lo
beLLer compeLe agalnsL

Lhe lhone whlch has long been heralded because Apple has been able Lo conLrol all aspecLs of Lhe phone
from sofLware Lo hardware
lndeed Coogles maln 8 message ln lLs Lakeover of MoLorola MoblllLy may follow LhaL playbook of 8esearch
ln MoLlon Lhe maker of 8lack8erry when lL acqulred Cnx SofLware SysLems a sofLware unlL of Parmon
lnLernaLlonal a llLLle more Lhan a year ago AL Lhe Llme of Lhe deal 8lM sald lL was buylng Cnx Lo enLer Lhe
auLomoblle and lnfoLalnmenL buslness whlch was a sLrengLh of Cnx 8lM played down any Lalk LhaL Cnx
mlghL be used as 8lMs nexLgeneraLlon operaLlng sysLem Cf course Lhe messaglng was a blL dlslngenuous
Cnx ls now bulldlng 8lMs operaLlng sysLem

1hey couldnL say lL because 8lMs developers would have sLopped developlng for 8lack8errys currenL
operaLlng sysLem McCourL sald

Coogles message may also be needed Lo wln approval from regulaLors who could seek Lo block Lhe acqulslLlon
lf any number of handseL makers came ouL agalnsL Lhe deal Cn Monday all of Androlds handseL makers came
ouL ln supporL of Lhe deal on Lhe basls LhaL lL would proLecL Androld from poLenLlal paLenL llLlgaLlon

none of Lhls ls meanL Lo suggesL LhaL Coogles sLaLed deslre Lo own MoLorola MoblllLy ln parL for lLs paLenLs ls
unLrue Coogle clearly has been lnvolved ln an efforL Lo buy moblle phonerelaLed paLenLs for Lhe lasL year lL
losL a blddlng war lasL monLh Lo buy abouL 6000 paLenLs from Lhe bankrupL LelecommunlcaLlons maker norLel
neLworks (Apple and MlcrosofL led a group LhaL ouLbld Lhem)
8uL lL ls undenlable LhaL Coogles new chlef execuLlve Larry age has long had a hankerlng for Lhe moblle
phone buslness and Lhls acqulslLlon may be Lhe culmlnaLlon of hls amblLlons age afLer all was Lhe execuLlve
who personally pursued Lhe acqulslLlon of Androld and has been lLs blggesL proponenL

And he pressed Coogle Lo compeLe ln federal aucLlons for wlreless specLrum ln recenL years aL a Llme when
oLhers were more heslLanL and ln some cases was wllllng Lo overpay for specLrum

Pe was Lhe guy behlnd Androld Levy sald ln an lnLervlew Larry ls a blg amblLlous guy he wlll roll blg dlce

lf Lheres any quesLlon abouL Coogles moLlvaLlon Lo own a handseL maker raLher Lhan [usL a porLfollo of
paLenLs conslder Lhls lnLerulglLal a llcenslng company LhaL owns some 8000 wlreless paLenLs and has
anoLher 10000 paLenL appllcaLlons belng processed has been up for aucLlon Many lndusLry lnslders were
sure LhaL lf Coogle were serlous abouL acqulrlng a porLfollo of paLenLs lnLerulglLal would be lLs LargeL 1he
companys markeL value ls only abouL $3 bllllon and lL doesnL come wlLh all Lhe baggage of MoLorolas
handseL buslness

lf Lhls deal was [usL abouL paLenLs Coogle would have boughL luCC McCourL sald referrlng Lo lnLerulglLals
sLock Llcker

Cuess whaL happened Lo shares of lnLerulglLal on Monday? 1hey fell 14 percenL now LhaL Coogle ls unllkely Lo
be a buyer
NEW DELHI: Google's surprise acquisition oI Motorola Mobility Ior $12.5 billion has
created a stir in the telecom market as it pits the search engine giant in direct competition
with Apple and heralds its entry into the handset segment. While this is a logical next step in
its wireless strategy, which has so Iar been led by its Android operating system, critics Ieel
that Google, besides entering a low margin business, may end up antagonising its Android
partners. ET cuts through the maze and decodes the deal Ior you.

WHAT DOES GOOGLE GET FROM THIS ACQUISITION?

OI the top Iive-smartphone makers, Apple and RIM both own the hardware on which their
soItware runs - they have complete control. Now with this expensive acquisition , Google,
too, will own both soItware and hardware , even though it will continue to provide its
Android soItware to other handset makers such as Samsung, HTC and LG. Motorola
Mobility doesn't just make smartphones and tablets - it also makes a host oI Motorola-
branded accessories like Bluetooth headsets, speakerphones, car kits, portable chargers and
music docks - all oI which are new, unexplored and potentially proIitable Ior Google.
Further, Motorola Mobility is the OEM manuIacturer Ior a lot oI cable TV boxes, set-top
boxes and internet connected devices Ior your TV. It could be the ideal global re-launch
platIorm Ior Google TV - Google's attempt at marrying the web, search and television
programming.

WHY DID GOOGLE CHOOSE MOTOROLA?

The big reason could be the 17,000 patents owned by Motorola (with 7,000 more in the
pipeline). It's no secret that lawsuits have been Ilying around, many oI them targeted at
Android. With these patents under its belt, Google gets intellectual property protection. It also
gets some major Iirepower to do a Iew things - such as preemptively suing other major
smartphone makers who inIringe on these patents. "This deal will help Google to secure the
Iuture oI Android which is strategically important to Google because it allows them to
maintain a strong position in mobile advertising . This would also help Google to handle the
two primary threats that Android Iaces i.e. Patent litigation & Fragmentation," says Gartner's
principal research analyst Vishal Tripathi.

WHY DOES GOOGLE WANT TO ENTER THE HANDSET MARKET?

With Motorola's extensive hardware design expertise, Google could shake up the Android-
based handset market. Even though Motorola Mobility will remain a separate company,
Google will have the opportunity to integrate hardware and soItware to make better
perIorming Android handsets. Moreover, it could sell top-spec Motorola Android
smartphones at less than halI oI what the competition does - incurring losses, but
consolidating market share.

WILL OTHER COMPANIES USING ANDROID BE AFFECTED?

When the deal closes later this year, Motorola Mobility will be run as a separate business.
Google promises that Android will be run as an open platIorm and that the acquisition will
not aIIect how others (manuIacturers like Samsung, HTC & LG) use Android. However, this
doesn't change the Iact that these other handset makers eIIectively become Google's
competition.

WHAT ARE THE RISKS OF THIS ACQUISITION?

In one shot, Google hires 19,000 employees and enters a low margin business. More
importantly, it runs the risk oI antagonising Samsung, HTC, and others that use its Android
soItware, as Irom collaborators, they could now become competitors.