Hundreds of framed patents hang on two separate walls at the headquarters of Motorola Mobility in Libertyville, Illinois. They testify to the pride in innovation at Motorola, a luminary of American business that has survived corporate crises and enormous technological change.
But the company has never grappled with something like this: A murky future governed by Google, a powerful master with unclear intentions.
In announcing its planned $12.5-billion purchase of Motorola Mobility last week, Google emphasised its interest in the company?s rich trove of 17,000 patents. That portfolio would allow Google to defend itself against foes like Apple and Microsoft in the legal arena, where billions of dollars in patent licensing fees can be indirectly negotiated through lawsuits and countersuits.
But while industry analysts and insiders say the rationale makes sense, they also say it leaves Motorola in an unusual position. Many acquisitions are aimed at creating some well-articulated synergy between the two companies, but Motorola?s future role in this union ? beyond patent warehouse ? is unclear.
Heightening the uncertainty is that the companies involved, both of which declined to comment, are in some ways as different as two technology companies can be. Google makes internet services and software, thrives on high profit margins and distributes its product using giant data centres. Motorola makes hardware, has modest margins on a good day and moves its products on trucks and airplanes and through brick-and-mortar stores.
Some hope the cultures will fuse and lead Motorola to a future as storied as its past. Martin Cooper, 82, who worked at Motorola for 30 years and developed the first hand-held cellphones there, said he hoped great things would come from combining Google?s momentum and confidence with Motorola?s tradition of excellence in radio technology.
?The combination might make Motorola successful ? again,? said Cooper, whose patent from the early 1970s for cellular phone technology is among those that hang at the company?s entrance. At the least, industry analysts said Motorola almost certainly would become a laboratory for Google to seek to perfect Android, its mobile phone software, in concert with newly acquired hardware engineers. Others say Google may wind up giving financial backing to Motorola to help it revive its flagging fortunes in Europe and Asia.
But if it appears to be getting too cozy with Motorola, Google risks upsetting other mobile phone makers like HTC and Samsung, who build some of the most popular smartphones and tablets running on Android. ?How do you compete with your partners and also work with them?? said Ben Schachter, an analyst with Macquarie Capital, who called the situation a ?head-scratcher?.
Google has said it will allow Motorola to run independently. But some analysts and investors think Google could markedly pare back or sell big parts of Motorola that create conflicts with partners or are not central to its goals. And that makes for uncertain times for the 19,000 employees at Motorola Mobility in Libertyville, a northern suburb of Chicago, and around the world.
?It?s like, thanks for everything you did in the 20th century, but you?re being bought by a search engine,? said Roger Entner, a telecommunications industry analyst and founder of Recon Analytics, a market research firm. He added, ?Nobody ever buys a company and leaves it alone.?
Motorola traces its beginnings to 1928, when two brothers, Paul and Joseph Galvin, started a company making power converters for household radios. In 1947 it changed its name to Motorola, after its popular car radio brand.
In recent years, after the failure of its Razr mobile, Motorola flirted with financial doom. It was only in the last few quarters that it surged back under the leadership of Sanjay Jha, a former executive at Qualcomm, who joined Motorola in 2008 when it was in danger of missing the rise of the smartphone.
He made significant changes, cutting thousands of jobs and splitting the business in two: Motorola Solutions, which sells equipment to businesses, and Motorola Mobility, which handles consumer products like phones and set-top boxes.
In the company?s second quarter this year, it reported revenue of $3.34 billion and a profit of $26 million. That was up from revenue of $2.6 billion and a loss of $87 million for the period a year earlier.
Lawrence Harris, a senior research analyst with CL King & Associates, an investment bank, said the mercurial nature of the phone business might wind up feeling very foreign to Google ? and challenging. He said he was also not sure that Google had put that much thought into what to do with the physical manufacturing, the distribution and the sales staff. Even further afield for Google is Motorola?s involvement in making television set-top boxes, a modest part of its business.
Kevin Smithen, an analyst at Macquarie Capital, said Google might eventually sell off the phone and set-top businesses. Motorola would be ?pared down if Google goes in that direction?, he said.
But others say Google has the chance to help Motorola grow. Carolina Milanesi, an industry analyst with Gartner, said Google?s ample pocketbook could help Motorola return to former glory by expanding in places like Europe and Asia, and also by helping it sell lower-cost smartphones that might appeal to a mass market.