Like many in the tech business, this morning I experienced a "holy #@%&!" moment.
Google is buying Motorola's cell phone business for $12.5 billion.
Did I mention "holy #@%&!"
Some folks are touting this as the biggest acquisition ever. Perhaps on a pure dollar level, but once you factor in inflation, J.P. Morgan's 1901 purchase and consolidation of Andrew Carnegie's steel company plus two other smaller steel firms for $492 million to create U.S. Steel is slightly larger – using an Inflation Calculator, Morgan's purchases works out to $12.72 billion in today's money.
But I digress.
According to those in the know, the deal is mostly about patents. Motorola invented the cell phone back in 1973 (more on this in a minute) and own literally thousands of associated patents.
Google, of course, created the Android operating system used on not only Motorola smart phones and tablets, but smart phones and tablets from Samsung, HTC and dozens of others. Google even has a couple of cell phones, the Nexus, made by Samsung.
Nothing really will change. According to a joint statement from the two companies, the acquisition
will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.
I'm not sure how the acquisition will enhance competition, but it certainly gives Google a bit more control over how Android and the phone/tablet hardware work together, a synergistic advantage thus far enjoyed only by Apple. What Google/Motorola/Android lack, of course, is Apple's content, an iTunes-like software/store/sync center, and Apple's ecosystem.
But I digress again.
Plus, the deal will require regulatory approval from the U.S. and European powers-that-be and from Motorola shareholders. Both are likely to encounter little difficulty, unlike the proposed AT&T/T-Mobile merger.
'I feel sadness'
On a personal level, this deal saddens me. As noted, Motorola invented the cell phone. That's not hyperbole.
AT&T had developed the cellular network idea over a 20-year period after World War II. By the late 1960s, when the final technical hurdles had been overcome, Ma Bell threatened to create a second monopoly alongside its control over the landline phone business.
But the "mobile phone" business at that time was all about car phones. Motorola executives Marty Cooper and John Mitchell wanted to prove to the FCC that awarding AT&T a cellular monopoly would stifle innovation. To prove what competition could create, the two hatched the idea of a portable phone, made real in a crash four-month program between Thanksgiving 1972 and April 1973 by a team of engineers led by Don Linder and designer Rudy Krolopp.
I've had warm relationships with Marty once I wrote his and Motorola's cell phone birth story for American Heritage of Invention & Technology magazine, which you can read here. After he heard about the Google deal, Marty told me "I feel sadness at the loss of an 82-year-old culture of striving for excellence in radio technology."
But Motorola didn't only invent the cell phone, they were the first manufacturers of them when the first cellular networks launched in October 1983, and its leading innovator. Motorola made the first true compact cell phone, the StarTAC, in 1996, and once again revolutionized the hardware with its razor-thin RAZR in 2004.
The iPhone effect
But in late 2005, the company partnered with Apple to create an iPod/cell phone hybrid, the ROKR (or "rocker"). The product was a disaster (you could only load 100 songs on it). ROKR's failure is what led Steve Jobs to grab creative control and create a cell phone without any outside interference – the iPhone.
Like many cell phone makers, Motorola was unable to keep up the innovation in iPhone's wake, leading finally to today's announcement.
I have a sense, however, that Motorola won't be alone in losing out in a business it invented. Kodak is reportedly having a tough time competing in the digital camera and pocket camcorder businesses, ironic because Kodak invented the digital camera, which I wrote about in "Who Invented the Digital Camera?"
These kinds of corporate deaths – RCA, Zenith, Magnavox and Palm are a few of recent vintage – are as inevitable as they are in real life. But as a technology historian, these kinds of deals make me wistful.
I just hope Google knows and values the legacy it's bought.