The bombshell news this morning that Google is trying to buy Motorola Mobility for $12.5 billion in cash is not actually that big of surprise. Anyone who read our article about what a nightmare the Android ecosystem has become for consumers knows that Google was having problems with its OEM partners. The real question now is, can Google build its own hardware business and mantain good relationships with its licensees. “No one has ever successfully licensed a platform and competed with licensees at the same time,” tweeted Gartner analyst Michael Gartenberg. “Apple tried it (twice) as did Palm & Nokia.”
The faint praise for the deal coming from Google’s partners this morning is revealing. “If you are one of Google Android partners, of course you are going to want to put the best possible spin on this and applaud the deal,” Mr. Gartenberg told Betabeat by phone this morning. “But the truth is that HTC, LG and Samsung are stuck between a rock and a hard place.”
While Google stated in its blog post this morning that it plans to run Motorola as a separate business, honor existing partner agreements and avoid favoritism at all costs, this language far more about anti-trust scrutiny than future plans. “Google sees that Apple has gotten bigger than Exxon as a vertically integrated company going after the top of the smartphone and tablet market. With a Motorola purchase, they can now do some really interesting things, including subsidizing the cost of high end Android phones way, way down. No partner wants to be the one chasing the scraps of the low-end mass market.”
Samsung, LG and HTC have built a sizeable portion of their business around Android. “What are they going to do, push Windows? Ballmer is already in bed with Nokia,” says Mr. Gartenberg. These companies could comfort themselves with Google’s past failure in the hardware space, but that was before they had a team with Motorola’s deep experience. “It’s not clear how well the 800 lb. gorilla can swim,” tweeted Gartenberg, “but when it jumps in the pool it tends to make a big splash. #GOOGMOTO“
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