Will Googles Motorola Mobility bet pay off?

Smartphone market is expanding globally. IDC, a US-based technology research firm, recently estimated that 718 million smartphones were shipped out in 2012, and forecast over a billion shipments in 2014. Apart from the innovations in software and operating systems, the recent boom in the global smartphone market is also attributable to the hardware and design of the devices.
Google dominates this market, as a large majority of smartphone manufacturers (including Samsung, HTC, ZTE and Huawei) deploy the technology giants Android mobile OS on their devices. But, perhaps, thinking beyond the current smartphone dynamics, Google acquired last year a smartphone manufacturing facility - a move which is set to become a game-changer this summer.
Google acquired Motorola Mobility - which was formerly the cellphone manufacturing arm of the renowned tech firm Motorola, and which produced famous Razr and Droid series of smartphones - in a $12.5 billion deal in May last year. The elite Motorola unit produced smartphones as well as home electronics like set-top boxes, end-to-end video solutions, and cable modems.
Motorola Mobility was in loss when it was acquired, and it hasn turned any profit since then - therefore, a second round of cost-cutting measures is underway even as pre-Google smartphones are being shipped out. Some financial analysts doubt the Units viability in the future and are afraid of its impact on Googles earnings, but technology analysts attach a strategic value to this business.
Apparently, Google went for the loss-making entity as it wanted to expand beyond its software business. However, the ongoing transcontinental patent battles among major players (e.g. Microsoft & Google, Apple & Samsung) reveal that it was the patent arsenal held by Mobility which Google was more interested in. Mobility reportedly had 17,000 patents at its buyout, with another 7,500 pending approval.
In short, Google was looking to fend off patent infringement lawsuits against some of the features in its open-source Android OS, while at the same time, counter-attacking its competitors over infringing on Mobilitys patents.
In fact, Google said something to this effect when it showed its intent to buy Mobility. An August 2011 press release noted that, "Motorola Mobilitys patent portfolio will help protect the Android ecosystem. Android, which is open-source software, is vital to competition in the mobile device space, ensuring hardware manufacturers, mobile phone carriers, applications developers and consumers all have choice."
While the patent lawsuits may continue to entangle the competitors in lengthy battles, the other aspect of Googles Mobility deal is going to become evident in May this year. Google is rumoured to announce the launch of a high-end smartphone, X Phone, from its Mobility factory, which will take a shot at the top of the smartphone market, with features and specifications rivaling those in Apple and Samsung devices.
With X Phones launch, Google will join the likes of Apple and Blackberry who control both their hardware and software businesses. Google has reportedly assigned some of its best human resource to this struggling-yet-promising unit to take this project forward. The impact of that launch is expected by many tech analysts to change the dynamics of future smartphone wars, regardless of a hit or a miss!
With Google launching its own smartphone, it would be interesting to see how its Android OS customers, especially Samsung, react if Google hits a home run with the X Phone. In a recent WSJ story, Google officials have reportedly referred to the Mobility business as an insurance blanket in case Samsung turned its back on Android. Wait, till May 15, to find out which way the cookie crumbles!