Smartphones

Will Google-Motorola deal drive Microsoft toward HTC or Nokia?

The Google-Motorola deal will shake up the Android ecosystem. In fact, it may drive one of the vendors into Microsoft's waiting arms.

Google buying Motorola Mobility is destined to cause a major shake-up in the Android ecosystem, but it's also going to reverberate across the entire mobile space. In light of Apple's success in vertical integration and Hewlett-Packard buying Palm, the Google-Motorola deal could now force Microsoft to buy out one of its hardware partners in order to keep pace with its rivals.

The deal is a big win for Motorola Mobility, which has produced some of 2011's most innovative Android devices -- the Motorola Xoom tablet and the Motorola Atrix and Motorola Photon smartphones -- but its products have suffered from tepid sales, been a little bit ahead of the market, and have sometimes gotten lost in the shuffle of the burgeoning market of Android devices. Putting the Google brand name on these Motorola devices would immediately give them a lot more marketing punch and consumer appeal.

But, Google is also going to have to deal with fallout from other Android partners. A lot of companies have been rallying around Android over the past 24 months -- Samsung, HTC, LG, Lenovo, ASUS, and many more. Google just made all of them feel like second-class citizens in the Android ecosystem. They will start worrying that Google is going to keep its best Android innovations close to the vest, release them on their own Google-branded devices (made by Motorola), and then let the rest of their hardware partners scramble to find a niche to innovate on.

Google Android chief Andy Rubin tried to downplay those fears on Monday. He said, "Our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open -source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices."

Of course, he's going to say that. He has to. However, if you look at the way Google partnered with HTC for the Nexus One, Samsung for the Nexus S, and Motorola for the Xoom -- and gave those companies a leg up on the latest Android software -- then you have to assume that most of that kind of partnering will be done internally with its new hardware division run by Motorola.

Those worries are going to affect some companies more than others. Samsung isn't likely to get too bent out of shape about it. It is largely a manufacturing company that wants to sell as many devices as it can, and it already has a nice foothold in the Android market and great relationships with lots of telecom carriers. Samsung is more about price and hardware features than innovative design or being first to market. Not much will change for them. The same pretty much goes for LG, even though it's much newer to the Android ecosystem.

The biggest potential loser in the Motorola deal is HTC, a much smaller company that's focused primarily on smartphones. HTC is all about design, innovation, and being first to market with cutting-edge devices like the HTC ThunderBolt, which was the first smartphone to run on Verizon's next-generation LTE network. You have to think that in the future, companies are now going to partner directly with Google for leading-edge Android devices.

This could push HTC toward Microsoft. HTC was originally focused on Windows Mobile devices, but Android arrived on the scene at a time when Microsoft's mobile strategy was unclear, so HTC shifted most of its effort to Google and delivered excellent designs, such as the Nexus One and popular devices like the HTC EVO. Still, HTC has retained its ties with Microsoft. When Microsoft pulled off its mobile reboot with Windows Phone 7, HTC jumped on board as a partner and has produced two of the best WP7 designs -- the HTC HD7 and HTC Trophy.

There is still a lot more sales potential in the Android ecosystem than the WP7 ecosystem, so I wouldn't expect HTC to abandon its Google partnership in favor of Microsoft. But I wouldn't be surprised if HTC was suddenly a lot more willing to listen if Microsoft came calling with a buyout offer.

An HTC acquisition would have two big benefits for Microsoft: 1) It would take one of the highest quality vendors out of the Android ecosystem (and the one with the best software layer - Sense UI); and 2) It would help Microsoft bring top-notch devices to market more quickly.

With all of its main rivals -- Apple, Google, and HP -- now vertically integrated in mobile, Microsoft is going to have to seriously consider whether it has to go the same route. If it sticks to the third-party model alone, it will have a hard time keeping up, since it takes a lot more time to release software and coordinate with vendors than to have hardware and software divisions working hand-in-hand throughout the entire product development life cycle.

There's also one other issue Microsoft has to consider: Nokia. Earlier this year, the two companies signed a huge deal to get Nokia to ditch Symbian in favor of Windows Phone 7 as its primary smartphone platform. If Microsoft bought HTC and started releasing Microsoft-branded WP7 devices, it could sour the Nokia deal and push Nokia to pursue Android devices in addition to WP7 phones. With a Nokia partnership and joint development already in progress, it may simply be more likely that Microsoft would purchase Nokia over HTC -- although if Microsoft wanted to get really serious about vertical integration in mobile, it could potentially purchase them both.

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About

Jason Hiner is the Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He is an award-winning journalist who writes about the people, products, and ideas that are revolutionizing the ways we live and work in the 21st century.

38 comments
sgtfrench68
sgtfrench68

Google made the buy to protect the platform, period. All those patents ensure they won't be stymied in court and lose big money over infringement lawsuits with each progressive step they make. Motorola may be a great company, but, they aren't exactly the leading edge they used to be in the 80's and 90's, but their defense contracts, which is what built them, gives them killer R&D in areas like the jawbone. Sexy as that may be, HTC put a lot on the line for google, and once you build that kind of partnership, your'e not just going to throw it away because you bought motorola. GOOGLE might wanna partner with HTC by purchasing a sizable amount of HTC stock so that HTC knows they are truly vested in the ongoing success of the company. The windows mobile platform sucks for so many reasons, its not worth the waste of time to explain. HP's announcement that they are quitting hardware only backs up the idea that the open source android platform is the future, too bad their so late on the draw... guess they're gonna get theirs for being so thick about making fixes for their vista machines to upgrade to win7, i spent months tracking down the right drivers for the upgrade, and lost 2 laptops to the refurb pile, which will get fixed when the economy lets me, piss off hp...

edguyer@hotmail.com
edguyer@hotmail.com

I have a hard time with Google's decision to buy up Motorola rather than HTC. It would be a shame to see HTC get bought up by Microsoft as they have a great product for the Android. And this comes from someone who uses a Motorola Android.

alfielee
alfielee

I understand your reasoning Jason & if this were Apple or Microsoft I would fully accept you views. Ultimately all tech-hardware & software companies come to some kind of demise or major focus shift in the long term. This is true of IBM, Microsoft, Apple, Sun, Oracle, HP & many that no longer exist in the computing realm as we know it. Many have merged (some more than once), been bought out, collapsed & disappeared, moved out of the industry, lost their original hardware/software focus to become only really be a hardware company or become a patent troll (my fave). Google is by all accounts a search & advertising company so to follow through with your thoughts Jason makes little sense. Their software & search primarily supports their advertising system & so far this arena appears on the surface to have a much more secure future. That being so it is in Google's best interests to simply compete on a level-playing field with the other major Android hardware manufacturers. Why would Google want to lose these partners? They maintain a massive crop of Android products that all use Google advertising. If Google uses the patent bank they acquired from Motorola to simply safeguard the hardware manufacturers, which is what Google said they would do, then this would develop stronger relationships between these makers & Google. It may even have the additional effect of making dual-OS providers drop their alternative, especially Windows Mobile which is only just hanging-in there. Google have said this was what they intended to do & from Google's past history there is little reason that I have seen to think otherwise...

ubergerm
ubergerm

Android and iOS are so much more superior to win7 that buying any hardware manufacture will not do any good to MS.

toni.abresch
toni.abresch

I hope HTC doesn't get bought by or join with Microsoft. I love my HTC Android phone, thank you very much.

Stalemate
Stalemate

It knows the future is in ensuring their solutions are available on multiple platforms, through multiple means. That's what sets them aside from the competition. The Chromebook project is interesting, but again it feels like an entry point to what Google really wants to promote: cloud computing via Google services. Their "default phones" were handled by HTC and Samsung in the past. Now the next one might be from Motorola. In the end, the hardware is just a means to an end: getting Android out there and claiming more enthusiasts who want a mobile solution they can adapt to their own desires. I regret not investing in Google and it's user-empowering vision back in 2004, like I'm sure Microsoft regrets not listening to Bill Gates saying they needed to move quickly to online apps before he retired.

DAMANgoldberg
DAMANgoldberg

Because they are buying Skype (I don't understand that one, for any price, much less $7B), this limits their hand in purchasing all of Nokia, HTC, and/or RIM. Now they can purchase 1 of the 3, maybe 2. I would back out of the Skype deal even if it cost me $500M to do so, to save my cash for Nokia + HTC if they like their OS and RIM if they don't.

mstevens
mstevens

How come you journalists never know about any of these kinds of happenings until everyone knows about them. Didn't journalists used to spill the beans now and then before things were deliberately made public.

Gisabun
Gisabun

According to a Cnet report, Microsoft was also looking at Motorola Mobility. If they did buy MM it would of caused some legal issues to make things difficult for Google. so Google paid a premium to grab MM before Microsoft did. After overpaying for Skype, buying MM could of been too much - at least at $12.5 billion. Now watch Google dump a chunk of MM's products!

adornoe
adornoe

and it could easily become the premier smartphone/tablet provider to the world. Microsoft could easily purchase HTC and Nokia and RIM, and continue those as separate divisions, all of them combining to provide a wider and better selection of smartphones and tablets than any of the competition. I don't see how Microsoft can afford to stay out of the hardware arena for smartphones and tablets now. The competition has thrown down the gauntlet and if Microsoft doesn't take up the challenge, they'll become "also-rans" in the smartphone/tablet markets. Apple and Google and HP and RIM and others provide the hardware and software for their products, and Microsoft would be very foolish to continue believing that, being the software provider to different manufacturers, is going to be enough to keep them competitive. Even Windows 8, won't rescue Microsoft from becoming a second rate company in the tech field, even with its huge arsenal of IT products and services. Having the income from the hardware and software is the only way to go, and, if Google and Apple and HP and others can do it, then it's time for Microsoft to realize that, this is not the 1990s or 2000s and the competition is not willing to play with just one deck. I don't see how Microsoft has any other choice but to go after one or two or even three of those "available" hardware providers, otherwise, Microsoft will become a distant third or fourth in the smartphone and tablet market, which, for all intents and purposes, they are now, It's time for Microsoft to start playing hardball. And, hey, while we're at it, perhaps MS needs to consider becoming a PC hardware provider as well, like Apple. If Google later on decides that, the Motorola purchase made them a bigger success, it would be just a matter of time before they decide to provide hardware and software in the PC arena as well. Then, it would be Microsoft getting slammed to the floor from all sides by Apple and Google and HP, and others. Microsoft actually has no options but to go the way of Apple and Google and HP. And, with Microsoft entering the field of hardware that would support all of its software, it could easily become the first trillion dollar corporation in history.

ITOdeed
ITOdeed

RIM needs a better O/S than HTC. I figure RIM would love a MS deal.

TyDavis22
TyDavis22

I see it as a win for google and a win for Microsoft, even if Microsoft goe with HTC you get better smartphones, with Nokia - Nokia gets better software.

NicoJuicy
NicoJuicy

http://www.google.com/press/motorola/quotes/ These are the responses from their partners, i don't think you have to read the blog and think about it, when you just see that. The only thing that is going to change is that Motorola is going to have quicker updates of the Android versions and their latest products will have the newest releases. But that's something Google already discussed with their partners and announced it at Google I/O and they agreed

bboyd
bboyd

Unless its a Hostile bid...

alfielee
alfielee

You're right on the money, my views exactly...

adornoe
adornoe

It really is worth the time for people to hear your explanation. Perhaps you know a lot more than the people who claim that Microsoft's mobile platform is actually better than the others. BTW, Google bought Motorola Mobility for the patents and for the hardware, because they want to be in the hardware business, just like Apple. If they sell the hardware side of MM, then the Google management will have to answer a lot of questions about why Google would be throwing so much money down the toilet just for patents. If the hardware side were to be sold, the selling price would be for a lot less than it was valued before it was bought, and shareholders are not too keen about just burning money.

adornoe
adornoe

It sounds like you don't like Microsoft, but, with their WP7/Mango and with Windows 8 coming along, and HTC owned by Microsoft would actually give you the best hardware/software experience around. But, don't forget, HTC was not up for sale or a merger target, and Motorola Mobility was. Now that Google/MM is close to reality, HTC might be amenable to a purchase or merger. It's Google that might have turned HTC into a Microsoft target.

alfielee
alfielee

Read my extended point below...

alfielee
alfielee

Makes no sense to do anything other than support the hardware manufacturers of Android...

AnsuGisalas
AnsuGisalas

By Cryst-Ball Inc. perhaps? Or iScry? But you are correct, social media has taken a good-sized bite out of the "Read-all-about-Read-all-about-it" shouting on the street corners by little kids in knickerbockers and tweed caps. A tweet chain will reach a lot of people before a Reuters editor can even look the piece through...

alfielee
alfielee

You have to have some innovation & at present under the restraints of Steve "I'm gonna f***ing kill Google" Bully-Ballmer, they ain't got a hope. There mobile software is less than great compared to Android or iOS. Why buy a mobile with a crappy OS for more than it costs to buy a decent OS on a mobile?

Still Lynn
Still Lynn

... what that deal would be and how it would benefit RIMM. TelePhone7 has sold as many units in the last year as Android sells in a few days to a week. The deal you talk about may help MS, or it may kill RIMM. And HTC already has the MS OS. So what better OS would MS be offering RIMM? I clearly don't see it the way you do. Not to mention how competition from RIMM will affect the 9 (once Nokia starts producing) handset makers already sharing that tiny slice of the market.

alfielee
alfielee

They will both be using MS Phone 7 if MS buys out HTC. What are you talking about, "better software". It's MS's software & it isn't better...

alfielee
alfielee

Not stupid for MS but stupid for Nokia. If Nokia turned around tomorrow & said we're going MeeGo completely, many would cheer. Having MS as their OS was & is a death-knell for this once great company. Going MeeGo completely or even partially with Android would bring many back to the fold in short time but while they play with MS on the side the bells are tolling...

alfielee
alfielee

I don't see how chasing the 3rd runner in this race as being viable. So far it's been nothing but a spoiler for Nokia so why do you think it would be any different for HTC. They have the choice & I think I know where most of their sales come from & it isn't WM7...

adornoe
adornoe

because, there is a very good chance that there will be more facts and truth in the tweet chain than in a massaged news story from Reuters, which is a very far left media organization.

desilvav
desilvav

that is why they are in the mess that they are in today ... ... and the people in the know are the people in the street, in the UK is would be a person on the Clapham omnibus ... ... and it goes like this, for every person in the know there are about 50,000 million who know better. I am happy to place a bet on that, I know I will win.

adornoe
adornoe

than both iOS and Android. Having a grudge against Ballmer or against Microsoft is no way to make judgements about the products. And hey, "innovation" nowadays is defined as "what company has a product which we can buy" or "merge with". Besides, most of what we're seeing with current technology is the same as "building a better mouse trap". Not much by way of real innovation. Tablets and smartphones are not that innovative, and they've been around for more than a decade.

TyDavis22
TyDavis22

I have a nokia phone with T mobile and it sucks, the os shuts down constantly

adornoe
adornoe

because, when it comes to any market, where sales are always fluctuating, there isn't and won't be a "settled" leader. WP7 and Windows 8, are admittedly, late in the game, but being late doesn't mean that, in the long run, they can't be the winner. Oftentimes, there are those that lead the way, but once the rest of the pack catches up, the leader becomes the follower and those with the better idea or better product, end up in the lead and winning. The table and smartphone marketplace will look different in 2-3 years, so, there is no rush to overtake the leaders right now. It's the one with the steady and sure pace that gets the lead eventually.

adornoe
adornoe

Microsoft is the owner of the multi-billion-user OS. So, it would seem like, the "50,000 million" in your statement are the Windows users, who seem to know best, and the person in the know would be those that don't use Windows. So, the people that "know best" are choosing the company that, according to you, is in "the mess they are in today". Perhaps we need more companies that seem to be failing (in your mind), because, those failing companies would be the most successful. Apparently, logic is not one of your strengths.. BTW, 50,000 million = 50 billion, which is a "tiny" bit more than the 6 billion people on the planet.

alfielee
alfielee

Now if I could only understand wtf you just said...

adornoe
adornoe

has been getting on a quarterly basis for a long time. The truth cannot be spun away with fanboism or dislike for a person. When Bill was there, he was more of a figurehead, and not much in the way of innovation. He would be the one that approved projects and conducted demos of upcoming products, but when it comes to how the company was being run, he mostly delegated and got credit for how the business was being run. Ballmer was more of the business side of the company, while Bill, like I said, was more about overseeing and approving the tech side. But, again the business decisions were made before Bill got to say his "fine, let's do it". With Bill gone from the day to day decisions, the company has actually grown and made huge profits, and the person most directly involved in taking the company in that direction, was Ballmer.

alfielee
alfielee

With the direction of Bill, who's basically gone now & on another trip. Ballmer is now out-of-touch. What they did in the past may well fit your bill but at the moment everything Ballmer touches turns to mud. As for me being out-of-touch, perhaps you're talking to a mirror mate & are just espousing rhetoric for the sake of sounding intelligent rather than acknowledging what I just stated & stated previously is accurate...

adornoe
adornoe

and then you're going to say that he's out of touch? You're still holding a grudge or you're in denial or you're the one that is totally out of touch, or all of the above. I think it's all of the above.

alfielee
alfielee

Ballmer has proven that he's basically playing as many fields as he can get his hands into. He has no vision & it is time he left. The fellow is a tool. Until MS have a real vision rather than playing catch-up, that is exactly the game they will be playing; catch-up...

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