I still think this is the primary consideration in this acquisition. That being said, it will be interesting to see how it plays out. When I was at Google there was a lot of challenges to creating any sort of hardware (the most capable of the groups was the Enterprise group that made the appliance and they still had a hell of a time at it). It is a very different discipline than 'iterate rapidly and ship early.'

For Google's sake I hope they can successfully run this business, or recognize early enough that they can't. If it turns out that it isn't in their DNA to run a hardware biz then it is important to re-spin it out before it dies from mismanagement.

It probably is.

However, this could also be a first step in a process of Google creating a vertically integrated phone offering.

Larry Page seems to be borrowing from Apple's playbook recently - first by focusing on a set of core products and cutting away Labs and other experimental peripheral stuff, second by integrating all of Google's offerings with G+ as the hub.

Adding a vertically integrated Android phone that competes directly with iPhone on design, UI/UX, build quality, etc. could be the next step in that.

Google can leave Android licensing as is for a few more years, but if their vertically integrated offering succeeds in the market, they may even eventually end the licensing deals, similar to how Apple ended deals with the clone makers when SJ returned as CEO.

Not saying that will happen, just observing that the Moto purchase could allow them to take that route in a few years if they so choose.

I suspect you're on the money here. Android is open source because Google wants everyone using ad-served google services.

Not because google suddenly wants to start making margin on the phone business. (That failed the first time, and they definitely didn't need motorola to try it again.)

> I thought this acquisition as was just about patents.

This, IMHO should be the top comment here.