Edible Apple

There’s so much fallout from Google’s Motorola announcement today that it’s hard to even know where to begin. While Google certainly strengthens its patent portfolio, the acquisition clearly raises a number of important questions.

First, how will Google’s other Android partners react? After all, they’re now competing with Google in the hardware market. Publicly at least, they’re taking a positive spin on things.

To wit:

Samsung President J.K. Shin said, “We welcome today’s news, which demonstrates Google’s deep commitment to defending Android, its partners, and the ecosystem.”

HTC CEO Peter Chou said, “We welcome the news of today‘s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.

Certainly behind the scenes, these companies and Google’s other partners have to be a bit more wary than they’re letting on.

On another topic, BusinessInsider writes that Google’s acquisition tacitly acknowledges that Apple’s strategy of vertical integration is superior to the experience provided by disparate companies where one provides the software and the other provides the hardware. One wonders, though, if Google would have been interested in this type of purchase if Android patent litigation wasn’t a problem.

Henry Blodget also writes:

Fifth, how will Google investors feel about the company entering an entirely different kind of business, one that could destroy its partnerships (and margins) in one of its most important new business lines?

Early on, investors hate it. Google stock has gotten smacked in the pre-market.

And no wonder: Hardware sales are a brutally competitive business, with a core competency entirely different from Google’s. Hardware manufacturing and sales are about supply chains, parts, factories, physical distribution, and consumer marketing–all things that Google has little or no experience with. And Motorola itself is not exactly knocking the cover off the ball these days in all these areas.

Additionally, Google just added 19,000 new employees. 19,000! Google itself only has 29,000. Google just increased the size of itself by 60%–in a company in which culture is crucial. Does Google really have the management in place to manage that?

So Google investors are smart to be worried.

So will this acquisition prove to be a shrewd move from Google?

It’s too early to tell, but this is undoubtedly one of the most intriguing, interesting and compelling acquisitions we can remember. The potential ramifications branch out into all aspects or the technological landscape and with so many moving parts, the fall out – whether it be good or bad – will be significant.

Lastly, and let’s be clear, Google’s acquisition is hardly a cure-all for their litigation problems. Yes, Motorola has thousands of patents, but that didn’t scare Microsoft or Apple from suing Motorola over Android-related infringement. The only difference is that they might soon be suing Google directly. The acquisition also doesn’t preclude companies like Apple from going after other Android handset manufacturers such as HTC and Samsung.