Be careful with your shiny new toy, Google!
Google (NAS: GOOG) just completed its $12.5 billion buyout of handset maker Motorola Mobility. The deal had been hanging on approval from Chinese antitrust authorities since February, when European and American regulators gave their stamps of approval. Beijing agreed last Monday night, and now Motorola is a Google subsidiary.
What's in it for Google?
Big G CEO Larry Page waxed poetic about the possibilities of this deal: "It's a well known fact that people tend to overestimate the impact technology will have in the short term, but underestimate its significance in the longer term," he said in a blog post. "Many users coming online today may never use a desktop machine, and the impact of that transition will be profound -- as will the ability to just tap and pay with your phone."
Page's post didn't mention Motorola's set-top box business, nor did it touch on the defensive value of Motorola's patent portfolio. At this point, Page would prefer if we investors focused on the growth opportunities in marrying Android to in-house mobile hardware.
But you know, that's a fine line to walk. Google has to squeeze value out of its largest acquisition ever without scaring away current Android kings Samsung and HTC. Mobile computing might look like a two-horse race between Android and Apple's (NAS: AAPL) iOS right now, but it's actually more competitive than that.
The usual suspects
Microsoft (NAS: MSFT) is a serious thorn in Apple's side in China, even if Windows Phone is off to a slow start in America. Research In Motion (NAS: RIMM) may be on the ropes, but the next generation of its BlackBerry platform might still turn that sad story around (though that's a long shot, mind you). If nothing else, Microsoft is happy to license Windows Phone to disgruntled Android builders, and maybe RIM could become a license-slinging software provider, too.
So if Google shows too much favoritism toward Motorola, there's no shortage of other platforms for Samsung and HTC to exploit. Big G knows it; the company has promised to keep Android open and Motorola as separate as possible. It's not only the right thing to do, but firmly in Google's best interests, too.
If nothing else, this buy gives Google some skin in the smartphone game. Android has always been free in the sense that Google doesn't charge you for building hardware around it. Microsoft might come knocking, asking for license fees based on Redmond patents and Apple might want you to just destroy the prototype and go home, but Google's Android revenue comes from ads and apps consumed on the device. That just changed.
This article originally appeared on Dailyfinance.com.
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