Report: Google, Motorola still unsure how to integrate

Google's (NASDAQ:GOOG) $12.5 billion acquisition of Motorola Mobility (NYSE:MMI) is on track to close sometime in the first half of the year, but the two companies are still sorting through how search giant Google will integrate a hardware firm, according to a report in the Wall Street Journal.

The report, which cited unnamed sources at Google and Motorola as well as others outside, said that many think Google believes it can maintain the high margins of its core Internet business while taking on a company with lower hardware margins. They also said Google thinks it can remain neutral among Android licensees while owning a large Android smartphone vendor. The report, citing unnamed sources close to Google, said Google plans to make a "substantial investment" in money and talent in Motorola so that Motorola can build "truly innovative devices."

For its part, Google is sticking to the script it touted when it announced the acquisition last August. "We are excited about the opportunities to build great devices capitalizing on the tremendous success and growth of Android and Motorola's long history of technological innovation," Google CEO Larry Page wrote last week in a company blog post. "But it's important to reiterate that openness and investment by many hardware partners have contributed to Android's success. So we look forward to working with all of them in the future to deliver outstanding user experiences. Android was built as an open ecosystem, and we have no plans to change that."

Andy Rubin, Google's senior vice president in charge of mobile, said in February he was "painfully aware" of the concerns that Google will use Motorola to dominate the Android ecosystem, but stressed that Google has "literally built a firewall" between the Android team and Motorola. "I don't even know anything about their products, I haven't seen anything," he said at the Mobile World Congress conference. "They're going to continue building Motorola-branded devices and it's going to be the same team doing it."

Others, however, think that Google might use Motorola to push the Android ecosystem in new directions. "I think it gives them the opportunity to push the envelope a little bit," Verizon Communications (NYSE:VZ) CEO Lowell McAdam told the Journal. 

Still others were less kind about the deal. One unnamed rival executive called it a "hairball."

What will become of Motorola's vast handset and set-top box businesses, which have around 20,000 employees worldwide, is a key concern. Rumors swirled last month that Google was looking to offload Motorola's set-top box unit. Though representatives from Google and Motorola declined to comment, Motorola did release a blog post that indicated it intends to maintain its set-top box business.

For more:
- see this WSJ article (sub. req.)
- see this VentureBeat article

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