THE TRUTH ABOUT THE GOOGLE-MOTOROLA DEAL: It Could End Up Being A Disaster. No, of course I don't want to be in the big, crappy, low-margin hardware business.
But I had no choice. A very interesting move by Google this morning, buying handset hardware maker Motorola for $12.5 billion. Google deserves credit for a big, bold move. But let's be real: This deal could end up being a disaster. How? Well, for starters, the deal creates major channel conflict: Google is now competing with its partners.
Let's have a look at some of the host of questions and challenges the deal raises, starting with the channel conflict: How do HTC and Samsung, two of the leading Android-based smartphone makers, feel about the fact that their "partner" Google is now competing directly with them for hardware sales? And we mean, how do they really feel, internally, not "what are they saying in public? " The only reason Android (and Google) have any share of the mobile game, after all, is because hardware makers like HTC and Samsung adopted Google's software platform. Nielsen. Will hardware makers trust Google after Motorola buy? — Mobile Technology News.
Google’s $12.5 billion purchase of Motorola Mobility today shows that the company is all-in with Android, paying a 63-percent premium to acquire Motorola.
Google says it will run Motorola as a separate business and the company will remain a licensee of Android. The deal should end speculation that Motorola will revert back to Microsoft’s Windows Phone 7 platform, while at the same time, raising questions from other companies that build Android devices. In 2007, Google helped form the Open Handset Alliance (OHA), to help promote and advance the Android platform. Many of the top-selling Android handsets come from OHA members such as HTC, LG, Samsung, Sony Ericsson(sne) , Acer, Asus and of course, Motorola. Here’s the official commentary from Google on Motorola’s future, which members of the OHA are surely interested in: Motorola’s total commitment to Android in mobile devices is one of many reasons that there is a natural fit between our two companies.
Exclusive: Guess who else wanted to buy Motorola? Google may not have had much of a choice when it came to buying Motorola Mobility for $12.5 billion.
If it didn’t, someone else would have and that would have put the company in an even bigger patent hole. Our sources say that Motorola was in acquisition talks with several parties, including Microsoft for quite some time. Microsoft was interested in acquiring Motorola’s patent portfolio that would have allowed it to torpedo Android even further. The possibility of that deal brought Google to the negotiation table, resulting in the blockbuster sale. Motorola found a Google deal more digestible because Microsoft had no interest in running a hardware business and was essentially interested in Motorola’s vast collection of patents. The high-level talks between Google and Motorola started about five weeks ago. My view is that while Google might have won the battle, in the long run it has put the Android ecosystem at risk.