Google-Motorola and Handset Makers, Carriers

HTC, Samsung Electronics and a host of smaller handset makers are at risk of losing their cachet after Google buys Motorola Mobility. The rival handset manufacturers, which have been building devices with Google’s Android software since 2008, may have a harder time cranking out bestselling devices because Motorola Mobility may get earlier access to the newest Android technology, said Michael Gartenberg, an analyst at research firm Gartner Inc. The acquisition gives Google an incentive to favor Motorola Mobility, and association with the Internet company will give Motorola handsets a leg up in competing for consumers. Samsung and HTC may be more inclined to forge closer ties to Microsoft or ally with Hewlett-Packard, said James Faucette, an analyst at Pacific Crest Securities. Microsoft can sweeten the deal by offering incentives to partners, Faucette said. Hewlett-Packard CEO Leo Apotheker has said he plans to license WebOS software to hardware makers. ZTE Corp, China’s second largest maker of phone equipment, said it plans to keep working closely with Google and Microsoft. Microsoft is already taking steps to convince partners that Google will treat them as second-class citizens.

Research In Motion, maker of the BlackBerry smartphone and PlayBook tablet computer, may have the most to lose. The deal would leave RIM a smaller player relative to rivals, which may force it to strike an alliance with another company or sell itself to remain competitive, said Will Stofega, a program director at consultant IDC. With Google’s cash and software expertise, Motorola may present a direct challenge to RIM in its traditional stronghold, the corporate market, he said.

Matt Rosoff writes that the only way that the WebOS mobile platform will survive is if Hewlett Packard licenses it to the big handset makers who are suddenly stuck between Microsoft-Nokia and Google-Motorola.

The major U.S. carriers have been silent in the wake of the deal's announcement, but one major carrier — France Telecom’s Orange — said that it supports the deal, with Senior Vice President Yves Maitre calling it “great news” for the industry. Maitre sees Google’s Motorola deal as a continuation of a trend toward a tighter tie between phones and the operating systems that power them.

"We're going to review the deal to understand the impact on the cable set-top box market, which has been a frustrating one for small cable operators long beholden to the Motorola-Cisco duopoly," American Cable Association President and CEO Matt Polka said. "ACA members will want assurances from Google that it is both committed to the cable business model and won't use its market power to run roughshod over smaller cable operators." Polka also called on Google to continue developing IP-based solutions for delivering video to subscribers across a range of devices. "Prior to today's Motorola Mobility announcement, Google has had its own interests in all of these areas, and it will be important that Google's other business interests do not unduly harm the growth of these new competitive market opportunities," he said.