Sound off: Experts weigh in on why Google purchased Motorola

Google (NASDAQ:GOOG) announced a blockbuster deal this morning to acquire Motorola Mobility (NYSE:MMI) for $12.5 billion. The move will meld Google to one of the world's largest makers of Android hardware, and has the potential to shake up the handset industry for years to come. FierceWireless surveyed industry players for their opinions on the deal. Here is a selection of their thoughts:

This further reinforces our belief that opportunities for the growth of Nokia's smartphone business will be greatest with Windows Phone. This could prove to be a massive catalyst for the Windows Phone ecosystem. Additionally, with our respective intellectual property portfolios, Nokia and Microsoft are working together to build and nurture an innovative ecosystem that benefits consumers, operators, developers and other device manufacturers."
--Nokia spokeswoman Anna Martin


We welcome today's news, which demonstrates Google's deep commitment to defending Android, its partners, and the ecosystem."
--J.K. Shin, president of Samsung Mobile


We welcome the news of today‘s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem."
--Peter Chou, CEO of HTC


Any way that they try and spin this, Google is now in the hardware business. Nexus One was a learning experience. Nexus S was another learning experience. Google has slowly but surely been exerting more control over Android. This has the potential to fragment the Android platform even further ... The company that will have the most control over what Android is going to look like is Google. Third party ODMs are trying to put the best face on this today, but this is clearly not a good day for them. There are so many ways Google can play this, and multiple ways that Google can play this simultaneously, that we're going to be feeling the ripples form this for years."
--Gartner analyst Michael Gartenberg


TBR believes Google's acquisition of Motorola Mobility will bring innovation to the mobile industry, as the company has done with Android and many other services.  Google will run Motorola Mobility as a separate business which will remain an Android licensee, though integrating the innovative Google culture will spur creation of new, unique products and services. Motorola Mobility currently focuses primarily on smartphones, though tablets and set top boxes are also of interest to Google. There is opportunity for Google to leverage Motorola's set top boxes for the Google TV initiative, which would open up the struggling service to a larger potential user base."
--TBR analysts Kate Price, Ken Hyers and Ezra Gottheil


Microsoft has clearly forced Google's hand to acquire an IP patent portfolio, which was part of the driving reason for the Motorola purchase. Now that Google can better ‘protect' Android, the question becomes whether it can balance this hardware business that it has acquired with being a licensee. One difference between this and previous failures to license OS' while making hardware (such as Palm) is that Google makes no revenue on licensing Android, so that is not a direct revenue stream. But it must still weigh the profitability of its own substantial handset business without threatening other leading licensees such as HTC and Samsung."
--NPD Group analyst Ross Rubin


The deal leaves Google in a very awkward position of being half-pregnant and trying to be a provider of an open source ‘environment' while at the same time competing with its ‘customers.' It also means that there are four integrated hardware/software offerings: Apple/iOS, HP/webOS, RIM/QNX, and now Google/Motorola and potentially a 5th if this deal emboldens Microsoft to pull the trigger on the long-rumored full take over of Nokia. The Apple story of simplicity and focused innovation at the app level has won out over complexity and innovation at all levels. Unfortunately, the deal extends the overall market fragmentation at a platform level well into 2013 to the frustration of developers.

So where does this leave the Asian OEMs HTC, Samsung, and LG? If Microsoft passes on the Nokia acquisition, this deal could throw Windows Mobile a temporary lifeline.  Forrester can hear Steve Ballmer and company pitching the Asian players on how Microsoft is the only hardware-agnostic player left and that HTC, Samsung and LG should increase their support for Windows Mobile as protection against Google favoring its own hardware play."
--Forrester analyst John McCarthy


With this acquisition, Google is creating a similar business model for Android, as what Microsoft did with Windows Phone 7 through the Nokia partnership--basically entering a first among equals model. This will make life harder for the non-Google Android brands and should be good news for the entire Windows Phone platform. There was serious concern that Windows Phone 7 becoming a Nokia-only platform, which would have been bad for Nokia and Microsoft. Now with both platforms being on equal footing or even a more even footing for Windows Phone 7, the Windows Phone 7 platform may gain even more traction with Mango software update about to come out. 

What is unclear is what Google will do with MotoBLUR. The software layer significantly improved the user experience compared to naked Android and was about to be killed by Google's drive to standardization. If MotoBLUR becomes standard Android, it will be a significant improvement for the general user experience of Android. Only the  HTC's Sense software layer creates a better user experience than MotoBLUR.

In the end it is also a validation of Apple's more integrated development approach. Would that mean that Microsoft is going to buy Nokia? They would be getting valuable patents and a handset development capability for cheap. Nokia's market cap is at $20 billion right now, Microsoft has $52 billion cash or near cash at hand."
--Recon Analytics analyst Roger Entner


This acquisition is a great deal for Motorola Mobility shareholders and even if it fails a rounding error for Google. The smartphone and tablet sectors are outrageously competitive and eking out a sizeable profit compared to Apple is going to be a challenge. Motorola Mobility was facing an uphill battle in a war that pitted it against one Goliath (Apple) and numerous Davids (HTC, LG, Nokia, Samsung). Google with its uber-popular operating system Android didn't need to own a handset manufacturer to be successful. It had already created pull-through demand by building a strong application market and end-user demand. Even if the Motorola Mobility unit of Google doesn't end up being highly profitable, owning a credible manufacturer where you can begin to incubate, pre-test, and implement new mobile-centric solutions is a good thing for Google. Google will now own a hardware vendor where its OS and applications can--in theory--be leading-edge. Some consumer will be willing to pay for those types of solutions."
--Analysys Mason analyst Steve Hilton

Sound off: Experts weigh in on why Google purchased Motorola