UPDATED 08:57 EDT / AUGUST 15 2011

The Google-Motorola Effect: An Industry at War

As reported in an earlier article, Google has agreed to buy Motorola Mobility for $12.5 billion in a business deal that will close either at the end of this year or early 2012.  The deal is perceived as a move by Google to increase their patents to get a bit of an edge over Apple and Microsoft.  So how has this business deal affected the mobile realm in its early phase?  Let’s take a look at a few of the companies that have already experienced a slight change since the news broke out.

Nokia and RIM both experienced increases in shares this morning, as Nokia went up by 9% while RIM increased by 5.6%.  The increase is said to be related to the speculation that both companies may also be acquired by Google or some other company;  Microsoft and Samsung are both said to be eyeing Nokia.

“This price should ring bells on how low Nokia shares currently are. And if you think of patents, now Nokia is the one with a really strong patent portfolio,” said Swedbank analyst Jari Honko. “I’d expect this will boost the speculation whether Nokia would be a takeover target too.”

Microsoft also experienced an increase in shares, up 25 cents (or 1% to $25.35), as companies may soon turn to Microsoft for their smartphone and tablet software and leave Android to Motorola.

Apple and investors are not fazed by the news as their stocks barely moved, proving that anything that Google does means nothing to the company or its investors.  Interesting, considering the number of lawsuits Apple has against Android handset makers in particular.

As for the companies taking a hit, Interdigital stocks dwindled to $12.93 (or 17.1% to $62.79).  This may have been an effect of the news that Google was supposedly buying the company, then with this Google-Motorola deal, the Google-Interdigital venture will likely stay a dream.

But the most jaw-dropping effect may be of Google’s share decrease, as mentioned earlier.  The reason for the drop is that investors are not happy with the deal, with an unsettling mobile industry currently at war.

Aside from the effects on other companies, this deal might be more of a problem for Google and its long term goals for Android.  As some are thinking that, though Android will still stay as an open platform, they may give Motorola early access for updates and other releases, which will drive more consumers to Motorola’s way.  This could leave other Android device makers high and dry when it comes to Android development, which in turn can drive these companies to the yards of competitors.  After all, Motorola was looking pretty open to Microsoft WP7 handsets just a few days ago, and as licensing fees get higher for Android handset makers, more manufacturers may seek deeper alliances with Google rivals.

This Google-Motorola deal may seem like a great one, but as with anything, it has its pros and cons.   This deal is also expected to rally antitrust investigators, and probes being pushed by rivals including Apple and Microsoft.


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