Google-Motorola Deal: What It Means To Samsung, HTC, and Microsoft

Google surprised everyone this morning when the search giant announced its plan to acquire Motorola Mobility for a whopping $12.5 billion.  With the acquisition, Google officially becomes a hardware manufacturer, a very competitive business that the company has little experience with, and will now directly compete with other Android-based smartphone makers like HTC and Samsung.

Henry Blodget of the Business Insider thinks that this recent move by Google could end up being a disaster:

Well, for starters, the deal creates major channel conflict: Google is now competing with its partners. And hardware manufacturing is an entirely different kind of business than Google’s core business. And hardware manufacturing is a crappy, low-margin commodity business. And Motorola is massive–Google has just increased the size of its company by 60%. And the deal appears to be purely a defensive move, not an offensive one. And so on.

Blodget reiterates that Google-Motorola partnership will create a rift from Samsung and HTC–both hardware companies that are highly attributed in the success of the Android platform–if Motorola will start gaining shares in the hardware market.

And we mean, how do they really feel, internally, not “what are they saying in public?” (The quotes Google has assembled from HTC, LG, et al, all appear to have been written by the same PR person–note the similarity in the language.)

Although, Google CEO Larry Page stated that the recent acquisition does not change anything with their commitment to Android.

This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them to deliver outstanding user experiences.

Instead, Page said that the deal with Motorola is to “increase competition by strengthening Google’s patent portfolio,” and to safeguard Android from other companies, which includes Apple and Microsoft, that are suing Google for patent infringement cases.

Larry Dignan of ZDNet is quick to point out that the Google-Motorola deal makes sense. Digna stated that the purchase solves a lot of patent problems for Google, gives them more room to play in hardware integration, and helps in fixing other issues.

The acquisition also means that Microsoft will soon become the only platform provider that doesn’t directly compete with hardware providers—unless they acquire Nokia, which they have partnered recently for $1 billion, or a struggling Blackberry maker Research In Motion.

Whatever Google’s decision in acquiring Motorola Mobility is, may it be for defensive purposes or an acknowledgment that they need to have an integrated mobile stack to beat Apple’s game, one thing’s for sure–they’ve just move the entire mobile industry onto a new different level.

This we’ve got to see.