Google’s Motorola purchase provokes mixed reaction

Analysts say purchase could spur Android partners to hook up their own partnerships

Tags: Google AndroidGoogle IncorporatedHTC CorporationInternational Data CorporationMergers and acquisitionsMotorola Home & Networks MobilitySamsung Corporation
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Google’s Motorola purchase provokes mixed reaction Analysts show mixed reaction to news of Google's planned take-over of Motorola Mobility.
By  Georgina Enzer Published  August 16, 2011

Google's planned acquisition of Motorola Mobility has taken the market by surprise and analysts in the technology and mobility community are showing mixed reaction to the news.

IDC says that the acquisition is a great opportunity for Motorola and will help it compete in the smartphone market with a differentiated mobile product. Motorola shipped 4.4 million smartphones globally in Q2 2011 and was the eighth biggest smartphone player with a 4.1% market share.

"In the first place, this is a great opportunity for Motorola. With Google's cash and control of Android, Motorola will be better positioned to compete in the smartphones segment... Motorola is a major Android manufacturer and this acquisition will allow the company to focus on differentiation as this is becoming key to succeed in the much crowded Android space," said Francisco Jeronimo, research manager European Mobile Devices at IDC.

IDC also said the purchase will help Google by giving it access to a large number of patents from the Motorola patent portfolio and this will allow it to fight back against the patent infringement lawsuits Android is currently facing. The acquisition will also give Google the ability to expand and improve its GoogleTV service.

"Motorola is one of the pioneers of mobile phones, and along with Nokia and Ericsson it has one of the biggest and most profitable phone patent portfolios in the world. Secondly, Motorola has an important set-top box business, which will help the GoogleTV service to expand. Google also becomes a consumer electronics manufacturer with the deal, which may open new opportunities in the future," said Jeronimo.

However, Jeronimo says that this acquisition will also make most Android players realise how dependent they are on Google and how quickly Google's plans can change their businesses.

"Samsung, HTC, and Sony Ericsson may now look at other platforms as a way to diversify the risk of being so dependent on one platform. Increasing their Windows Phones portfolio may now be a need in the long term. These companies don't want to see Google as their main partner and main competitor at the same time. Ultimately, we don't believe this acquisition is a first step for Google to close Android or to make it exclusive to Motorola. Google needs players such as Samsung, HTC, Sony Ericsson and others to continue growing Android's installed base," he said.

This acquisition may be the catalyst for companies to reduce their dependence on Google's platform to face future market challenges, according to the IDC.

Ashish Panjabi, chief operating officer of Jacky's Electronics in the UAE thinks that the acquisition will put Samsung, HTC and Sony under pressure to hook up with a partner going forward.

"If the Google Android tie up with a Motorola hardware offering is exclusive, then it may leave the likes of Samsung, LG and HTC out in the dark. Samsung has Bada as a back-up OS but I'm not sure if they intended for this to ever replace Android.  This may also mean we see more alliances or acquisitions as the likes of HP with WebOS is still struggling and may find partnering with Samsung or HTC is the way forward.  RIM also has been under pressure and may find HTC, LG or Samsung as a possible partner in challenging the dominance of Apple and Google," he said.
Stela Bokun, senior analyst at Pyramid Research agrees that the news of Google's acquisition may not be good for Android partners.

"In the medium term, I expect that today's announcement will result in a stronger commitment to Windows Phone by Samsung, LG, HTC and ultimately even Sony Ericsson," she said.

According to Pyramid Research however, Google's acquisition of Motorola Mobility for is good deal for both parties. Benefits of the planned acquisition include the fact that Google can now control everything about Android phones and become an end-to-end player.

"Google will now be able to complete its offer and position itself as an end-to-end player and will now have the control over the secure element of all Motorola's NFC enabled phones that will support Google Wallet," said Bokun.

The deal also added fuel to rumours that struggling Nokia and Research in Motion would become takeover targets and this sent Nokia's shares up 17.35% and RIM's up 10.3%, according to Reuters.

Shares of Motorola Mobility jumped more than 55% on the news, while Google shares fell by roughly 1%.

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