Why does Google want Motorola?
Three reasons come to mind:
1. Save the android platform from increasing ‘patent taxes’ that would stall its growth potential. Microsoft along with other companies have been levying royalties from handset OEMs (original handset manufacturers) by accusing them of infringing on patents. Prior to the Motorola acquisition, Android was the weakest platform acquisition in terms of its patent portfolio which meant Google was unable to defend OEMs from escalating ‘patent taxes’ levied by competitors with strong intellectual property portfolios.
2. So as to offer a ‘horizontal +’ play – Google can now license a complete software + hardware + industrial design + patents ‘stack’ to handset OEMs. This could be termed an "Android Experience licensing" program by
a. reducing time to market even further,
b. helping smaller ODMs produce better industrial designs and
c. better optimise hardware for software without relying exclusively on chipset vendors like Qualcomm.
The Motorola acquisition is in no way representative of a vertical OEM play as it does not help Google sell more ads (to justify the Motorola price tag).
3. To develop a complete reference design for home media devices & TVs which run Android, and thereby speed up the time to market and also impose strict compliance requirements that include hardware and DRM (the latter are musts for getting the Android platform endorsed by the TV studios and distributors).
In summary, when Google bought Andy Rubin’s team back in 2005 they never considered that Android was going to be 10x more strategic and cost-heavy than they ever imagined.