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Google buys Motorola Mobility for $12.5 billion – defines smartphone OS market mechanics

Google announced today that they are purchasing Motorola Mobility for $40 a share, or $12.5 billion.

While Google mentioned that it wanted Moto’s properties in phones, tablets and TV set top boxes, initial market analysis to the news indicate that it is the latest episode in Google’s patent battles being fought with Apple and others – it seems that Google is planning to wield Motorola’s patent portfolio as a defensive shield in IP litigation which Microsoft, Apple and Oracle have been taking against Android licensees – HTC, Motorola and Google itself – over allegations of IP violations.

Google added some canned quotes from their major licensees HTC, LG, Samsung, Sony Ericsson approving of the deal – Google is saying that Android will stay open and that it will not verticalize into an Apple “mini-me” any time soon. Asian Android device manufacturers share prices have risen on news of the deal.

The question now is what this means for the other major smartphone OS manufacturers: Apple (iOS), ¬†HP (WebOS), Microsoft (Windows Phone) and RIM (Blackberry). (There’s also been mention of Samsung giving Bada another push, but I think that’s unlikely. Nokia killed off Symbian earlier this year in favour of Windows Phone.)

If Google really does intend to keep Android open, then it seems inevitable that 3rd party licensing for Smartphone OSes will become the de facto standard market mechanic, at least for everyone else except Apple. Expect HP to start licensing WebOS to other manufacturers (eg Samsung, LG) in a similar way that Microsoft have bought off Nokia. The question is whether they can continue to charge proprietary  licences when Android is Open Source.

RIM, meanwhile, is looking vulnerable to takeover very soon, especially with all those patents…