Google may alienate allies with Motorola deal

The company will find it difficult to straddle the line between a partner and competitor with Motorola in the fold.

Google and Motorola Mobility will make for awkward dance partners to a room full of jilted companies uncomfortably eyeing the pair.

Remember the Nexus One? That was supposed to be the end of Google's aspirations to get into the handset business. But not anymore. James Martin/CNET

While Google's move to acquire Motorola for $12.5 billion is largely motivated by the need for more intellectual property , what's been largely left unsaid is how the Internet giant will juggle the duo roles of principal architect of the Android software and now a competitor to its vendor partners.

Google said Motorola will continue to run as a separate unit. Which begs the question: will handset manufacturers such as Samsung Electronics and HTC start viewing Google as a competitive threat?

"Any way (Google) tries to couch this, there's no doubt Motorola is the most favored player," said Michael Gartenberg, an analyst for Gartner. "If I'm a third-party vendor, I have some real concerns here."

Google is backtracking from its vow not to get into the handset business, a concern initially sparked when it began selling the Nexus One directly to consumers through its Web site early last year. At the time, Google said it wasn't interested in competing with its partners.

Now, a Motorola with Google's backing already adds a new potent competitive threat to a field that is already crowded. Despite Google's attempts to create a more consistent experience, analysts believe the vendors will begin to differentiate even more and rely less on the stock Android platform.

Related stories:
• Full coverage of Google's Motorola acquisition, from CNET and its sister sites

"If, for example, Google provides preferential access to the Android code to its own hardware division, this would place other vendors at a disadvantage and may lead them to question their commitment to the platform," said Nick Dillon, an analyst at Ovum.

For now, everyone is playing nice. Google Chief Executive Larry Page reiterated his company's stance on maintaining an open ecosystem. The Mountain View, Calif., Internet giant even has a page featuring praise from some of its largest Android vendors.

The hot line

What's the upshot of Google's bid to acquire Motorola Mobility?


"We welcome the news of today's acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem," HTC Chief Executive Peter Chou said on the site, echoing a sentiment shared by Samsung, LG, and Sony Ericsson.

Gartenberg said the comments were "damned with faint praise."

The comments were all in reference to the expected patent protection Google will be able to provide for the deal. Conspicuous in its absence were any of the company's thoughts on the new competitive dynamics.

Samsung declined to provide further comment on the prospect of competing against Google. Representatives from the other handset vendors weren't immediately available to comment.

Microsoft, meanwhile, took the chance to talk up its own independent status.

"Investing in a broad and truly open mobile ecosystem is important for the industry and consumers alike, and Windows Phone is now the only platform that does so with equal opportunity for all partners," said Andy Lees, president of the Windows Phone division.

Andy Rubin, head of Google's mobile operations, noted that the Nexus project, which began with the Nexus One by HTC and followed by the Nexus S from Samsung, will continue to be open to the various handset partners.

The Nexus program was always meant to be a platform to show off the latest and greatest features on Android. The Nexus S, for example, was the first Android phone to run on the Gingerbread version and also featured a near-field communications chip to run Google Wallet and mobile transactions.

But with Motorola in the fold, many expect it to get the latest software and features coming out of Android. With Google looking to crack down a bit on fragmentation, Motorola will likely focus on stock Android devices in the future, and likely downplay its use of Motoblur, analysts said.

That, in turn, may force the other Android vendors to push further with their efforts to further differentiate their phones.

The vendors may even take a second look at critical Android applications that promote Google service, such as Android Market and even the browser, which has its default search set to Google.

"(The other vendors) will have to work harder to differentiate," Gartenberg said. "You have to double down on customization."

Just as Microsoft's deal to closely align with Nokia caused some ripples with the other vendors, Google's deal with Motorola may force them to take another look at the Windows Phone platform.

"It puts the vendors between a rock and a hard place," Gartenberg said.

Updated at 1:05 p.m. PT: to include a comment from Microsoft.

Editor's note: This post was updated at 12:36 a.m. PT to clarify a quote by Michael Gartenberg. He said the comments were "damned with faint praise."

 

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