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[9 comments]

Google Going Mobile with Motorola Deal

August 16, 2011

Google's deal to acquire Motorola Mobility is being described as a means to advance its Android operating system in its battle against Apple and to protect it against patent suits from its rivals in the mobile space.

"We expect that this combination will enable us to break new ground for the Android ecosystem. However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community," said Andy Rubin, senior vice president of Mobile at Google, in a press release. "We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices."

Google said it would operate Motorola Mobility as a separate business once it receives approval from the antitrust division at the Justice Department.

Forrester Research analyst Charles Golvin told USA Today that the deal could "supercharge" the Android mobile operating system.

"Google could create a range of products that enable very rich, multidevice experiences in the same way that Apple does across iPhone, iPad and Apple TV," Mr. Golvin said.

A Wall Street Journal article said Google was seeking to emulate Apple by "integrating software and hardware into a single experience," the deal giving it "a way to create a consistent experience across devices, including phones, tablets and TVs."

FINANCIALS:     [NASDAQ:GOOG] [NYSE:MMI]

Discussion Questions:

Discussion Questions: What is your reaction to the Google/Motorola Mobility deal? How will the deal affect the mobile computing business in the years ahead?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How will the Google/Motorola Mobility deal affect Android OS market share in the next five years?

Comments:

As details on this deal emerge, it appears the primary goal was to acquire intellectual property and patents to keep Google in the mobile game, as opposed to leapfrogging the competition. Other opportunities do exist.

One hopes that a one-stop-shop for mobile hardware and software will create a more consistent user experience and eliminate some inconsistencies between devices. And in general, the Android phone will remain viable as the lower-cost alternative to the iPhone as opposed to a direct competitor.

The companies most threatened by this deal appear to be RIM and Microsoft - RIM because its user experience is becoming dated, and Microsoft because it must depend on partners.

I've said before that Microsoft should consider producing its own flagship line of devices and computers to compete with MacBook Airs and iPads. It's time to add "mobile phone" to that list. Instead of defining the low end, Microsoft should seek to re-define the high end, and make all other products carrying its OS aspirational to those flagships.

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Paula Rosenblum, Managing Partner, RSR Research

It is hard really hard to say. Google's Android dominates the market share (according to the USA Today piece it stands at 43%) primarily because of its relationships with its customers such as HTC and Samsung whose smart phones use the Android OS.

Purchasing the Motorola Mobility might send some strong signals to Google's OS customer base that in the long run Google may be their competitor.

If I were a hardware maker I would be a bit worried and would initiate strategic reviews of the market place in the long term (which in this business is 2-5 years).

This is an interesting time for both hardware and software makers where already the competition is fierce. Motorola's spinning off of the handset business was a good indicator that they recognized the increasingly competitive marketplace had changed from one where the key relationships were between carriers (AT&T, Verizon, etc.) and handset makers to the relationships between operating systems and handset makers.

Handsets, as Apple rightly figured, are to be designed to best acomomdate the features and capabilities of their software, form following function.

The winners will be those companies who are capable of doing both.

Charles P. Walsh, President, OmniQuest Resources, Inc

When a company has an insatiable thirst for the holy waters they move into a supercharge growth mode ... and so Google, loaded with cash and desire, acquires Motorola Mobility.

This will put the spotlight on the Android operating systems and will result in proud and creative Apple continuing to respond. The race is now on to see who can best integrate software and hardware in a single experience. Now I wonder if there are there any other dreamers closely watching from behind the Android hedges?

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Gene Hoffman, President/CEO, Corporate Strategies International

The deal should allow Google to better integrate their user experience across multiple devices, much like Apple does now. The key difference will be Google's open source philosophy, versus Apple's walled garden. I look forward to seeing how Google uses Motorola to innovate.

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Max Goldberg, President, Max Goldberg & Associates

The patent acquisition is critically important to this deal as both an offensive and defensive measure. The acquisition of a hardware maker opens significant competitive opportunities, though it will be a business challenge. But, the real win is in the understanding that all devices are merging and the cross device operating system will be the significant competitive tool in the end. This is an excellent move for a very forward thinking company.

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Gene Detroyer, Professor, Independent

Google picks up 15,000+ patents, and maintains a source for their Android systems, while abrogating potential patent infringement issues. Motorola Mobility cashes out from a space where they have lost scalable relevance.

A software concern (Google) buys a hardware operation (Motorola), and runs the risk of antagonizing other hardware manufacturers, possibly driving them into the hands of Microsoft. Hmmm, how did that type of strategy work for Pepsi Cola when they picked up the KFC/Pizza Hut concerns in the early 90's? Oh, yeah, that's right, they spun it out into Tricon, now YUM in 1997.

Google has the cash, and Motorola wants it. Some folks are going to be displaced in the not too distant future. Remains to be seen whether Motorola gets its mojo in added SmartPhone sales.

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Roger Saunders, Managing Director, Prosper Business Development

When Apple was sold for the first time in Verizon stores I had the feeling that Android sales would slump. The race for position in the Information Technology markets is and will be about innovative and easy to use devices with more power and speed running new applications in a smaller foot print. Software companies like Google, Microsoft and eBay for the most part lose sight of this and settle to striving for growth using ancient applications in brand new old technology platforms. Some may survive through mergers but most go the way of their predecessors like Lotus, Ashton Tate and Novell. "Droids" and BlackBerries are neat, while Apple is hot and has what buyers want, today. There is still plenty more to come and I am sure it will all be quite different from what we have now.

'gjarnoldjr'

Google has Apple dreams. This move will decrease the number of Android manufacturers as Google seeks to become an Apple "Mini Me". But Apple is a unique piece of fruit. Google, if allowed by the FCC and the Justice Department would certainly have an impact in 2 years, but it doesn't necessarily have to purchase Motorola Mobility to do this. There must be tremendous patent repercussions driving this deal.

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Kai Clarke, President, Kowa Optimed, Inc.

It was a long hard slog for Apple to surpass Microsoft, but as the world changed, Apple, with its own integrated hardware and software, moved past everyone else. So the question is, should Google stick with the bits and bytes, leaving the machines to others?

It isn't like Microsoft doesn't have forays into hardware, but their early squelching of operating system competition protected their monopolistic control of the hill. Is Google willing to accept the potential benefit of dominating the bits and bytes, or to play to the big game as Jobs did?

I don't think this is a "business" decision as much as it is a "guts" decision for Brin and Page, et al.

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Herb Sorensen, Ph.D., Scientific Advisor TNS Global Retail & Shopper, Shopper Scientist LLC

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