Who will be Hurt by Google Acquiring Motorola

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Yesterday, I bought a Motorola ME525 DEFY, which is a pretty cool smartphone. In fact, I prefer HTC to Motorola. And for Android fans, especially for the fans of HTC, Samsung, Sony Ericsson, the news of Google acquiring Motorola may got a mixed feeling of joy and sorrow.


Firstly, let’s see what happened between Google and Motorola:

Google Inc. said that it will pay $12.5 billion for cellphone maker Motorola Mobility Holdings Inc., the biggest acquisition in the Internet search giant’s history and one designed to make it a more formidable competitor to Apple Inc. and its iPhone.

The result, said Google’s chief executive, Larry Page, will be more and better smartphones for consumers. Google, which produces the popular Android software for smartphones and tablet computers, will be able to make its own hardware once it owns Motorola, which manufactures Droid smartphones and the Xoom tablet computer.

“Together, we will create amazing user experiences,’’ Page wrote on the company blog.

The acquisition has a strategic goal, as well: to protect Google and its Android software for smartphones and tablets against a host of costly patent lawsuits filed by its rivals. Motorola holds thousands of patents, which now will be owned by Google, giving the search giant a stronger hand in court. Android products are “under threat from some companies who are looking to use patents to compete,’’ said David Drummond, Google’s chief legal officer.

The rival handset manufacturers, which have been building devices with Google’s Android software since 2008, may have a harder time cranking out bestselling devices because Motorola Mobility may get earlier access to the newest Android technology, said Michael Gartenberg, an analyst at research firm Gartner Inc.

The acquisition gives Google an incentive to favor Motorola Mobility, and association with the Internet Company will give Motorola handsets a leg up in competing for consumers.

“This is their nightmare scenario,” said Gartenberg, whose firm is based in Stamford, Connecticut. “Google has gone from partner to competitor.”

Google is “committed to making that whole ecosystem successful,” Google Chief Executive Officer Larry Page said on a conference call. HTC Chief Financial Officer Winston Yung said he supports the deal. Google also said the transaction is supported by Samsung, Sony Ericsson Mobile Communications AB and LG Electronics Inc.


Analysis from analysts


Phone makers that partner with Google for its Android software officially said they welcomed the deal. But some analysts questioned their sincerity because their efforts to promote Android would now benefit a director competitor.

“Google is essentially granting most favored nation status on Motorola,” said J. Gold Associates analyst and consultant Jack Gold.



Android handset makers may be more willing to take a gamble on the unpopular Windows phone as an alternative.

But the deal brings Microsoft directly into legal conflict with Google over Android patents, which may hamper its attempts to collect royalty payments from Android handset makers.

Microsoft and Motorola are already involved in a number of claims on each other’s’ technology. Google’s move to throw its weight behind Motorola will make for a tougher court battle for Microsoft.



Nokia’s U.S.-listed shares rose more than 17 percent on Monday as Google’s offer for Motorola rekindled speculation of a bid for the Finnish mobile phone company. Nokia did not comment on the buyout rumors.

Nokia decided earlier this year to go with Microsoft’s Windows operating system instead of its MeeGo software, which is being phased out.



Shares of BlackBerry maker Research In Motion rose more than 10 percent on the news.

Next year, RIM plans to move its BlackBerry smartphones onto the same QNX-based platform that runs the PlayBook.

An ever-tighter integration between Android and Motorola’s hardware “may put additional pressure on the success of RIM’s pending QNX Super phones strategy,” RBC Capital Markets analyst Mike Abramsky wrote.



Analysts said the deal does little to change the mobile landscape for Apple, given that Google failed to excite consumers when it entered the handset business by launching Nexus, a phone co-manufactured by the Taiwan-based HTC Corp.

The most obvious impact will be on the multiple patent infringement lawsuits that Apple has against Android handset makers. Also, Apple was already suing Motorola Mobility for patent infringement.



Google has long been seen as a threat to the traditional pay TV industry, first with YouTube and then with Google TV box. Neither have quite had the negative impact on the cable business that some had predicted.

With this deal, Google is set to become one of the pay-TV industry’s largest suppliers. Even if physical set-top boxes go the way of the Walkman, Motorola’s encryption and conditional access software will continue to be important.

Bernstein Research analyst Craig Moffett said “the cable industry would be delighted to see Google inside the tent, so to speak, of the traditional Pay TV model.”



Shares of Inter Digital Inc. fell 18 percent after Google’s bid for Motorola sparked worries that the search giant may no longer be interested in the company’s wireless patent.

In July, Inter Digital said it was looking at a possible sale of the company and the Wall Street Journal later reported that Google might be in the race for its patents. Analysts, however, said Google could still be interested in the patents.


What Cisco suffered is just like what Google faced. Cisco need to restructure its market policy, enhancing its core business, also need partners to develop its strength (in Cisco router, Cisco switch, collaboration, cloud computing, network architectures). Similarly, Google need the chance to acquire Motorola mobility and its patent to further the Android, mobile operating system for mobile devices. What the prospect will be will be? All the experts and fans of Android are waiting here…

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One Response to "Who will be Hurt by Google Acquiring Motorola"

  1. magnificent post, very informative. I wonder why the other experts of this sector do not notice this. You must continue your writing. I am sure, you have a huge readers’ base already!


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