Analysts concur – Google's $12.5 billion acquisition of Motorola Mobility makes a lot of sense, but Google risks alienating Android's staunchest allies with the deal.
Ovum analyst Tim Renowden says that, as well as bolstering its patent portfolio, the deal “brings Google significantly closer to Ovum’s hypothesis of a ‘managed device platform’ where a vendor controls all aspects of a platform, including hardware, software, content and online services.”
Research firm In-Stat similarly asserted that Google is aiming to address platform fragmentation and gain greater influence over the Android ecosystem. “By purchasing Motorola Mobility, Google can take control of the platform in a way that just wasn’t possible before,” the firm states.
Its own hardware capabilities could also potentially allow Google to better compete directly against Apple, InStat added.
Gartner research vice president Phillip Redman notes the deal has “changed the mobile handset market forever, with names like RIM, Nokia and Motorola no longer driving the market, but for the foreseeable future, Apple and Google.”
The benefits of Google's planned purchase don't just extend to Android. InStat points out that Motorola Mobility's set-top-box division will eventually provide opportunities to develop the less-than-successful Google TV venture.
But the pundits also agree that Google will need to tread carefully to avoid making enemies out of its Android ecosystem allies.
“Now that Google is a hardware manufacturer, the relationship that it has with its other hardware-manufacturing partners is sure to change,” InStat notes, adding. “Will Google add tweaks to Android to give it a strategic advantage over its partners? Even if the answer is no, the suspicions might be present.”
These suspicions could prove detrimental to Google's relationships, Renowden said. “Any hint of favoritism or signs that Motorola is getting an unfair advantage, and other key Android vendors will not be pleased.”
Echoing this sentiment, shares in Nokia soared after the deal was announced on anticipation some handset makers will jump ship to Microsoft's platform, indirectly benefiting the Finnish vendor, Bloomberg reports,
Analysts the news outlet spoke to suggested that Google might sell Motorola's handset division in order to assuage its partners.
Redman said he was more interested in how telecom operators will react to the deal. “Since they know Google would like to take over the content delivery business, albeit riding on their pipes, how far will they let them go? And do telcos have a choice?”