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What Google's Motorola Buy Means for Microsoft

Google's $12.5 billion acquisition of Motorola Mobility Holdings Inc. seems aimed at competing with the Apple iPhone, but the move may give Microsoft an important opening for its struggling Windows Phone smartphone platform.

Google and Motorola Mobility announced the deal Monday morning. It's been approved by both companies' boards of directors.

What Motorola brings is the ability for Google to work closely on both the Android mobility software and the Motorola device hardware to potentially create the kind of tight device integration Apple offers with its iPhones (and the possibility of taking that close working relationship to tablets later.) In a blog posting, Google CEO Larry Page said the move would "supercharge the Android ecosystem."

Until this deal, Google and Microsoft both were taking "open platform" approaches -- in the sense of providing the software that hardware OEMs built devices on. The open source element of Android added another dimension to Google's "open" approach. But strictly using the software platform definition, the open approach is the one Microsoft rode to massive success on PCs and servers. Despite that history, Redmond has had a hard time getting manufacturers' attention when Google's Android platform owned the largest piece of the smartphone market.

Suddenly, Google is muddying its own waters when it comes to that open platform. It's hard not to suspect that once Motorola is in-house, some device manufacturers will be more equal than others.

Google executives were quick to offer assurances to the network of 39 manufacturers and 231 carriers in 123 countries that partners wouldn't be cut out. "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," said Andy Rubin, senior vice president of Mobile at Google, in an official statement accompanying the deal announcement.

Page expanded on the theme in his blog: "Motorola will remain a licensee of Android and  Android will remain open. We will run Motorola as a separate business. Many hardware partners have contributed to Android's success and we look forward to continuing to work with all of them to deliver outstanding user experiences."

Does Google mean it, or is an iPhone-like device the end game?

Microsoft doesn't know, but the company's obvious play is to reinforce the legitimate doubts Google's many other device manufacturers will have. There's nothing wrong with emphasizing Fear, Uncertainty and Doubt about your competitor when your competitor is responsible for creating the FUD.

Here Microsoft stands with a new mobile OS, "Mango," and a huge opportunity to get hardware partners enthusiastic about putting marketing weight behind Windows Phone "Mango" devices.

(That's minus one potential partner: Motorola, whose recent talk of considering the Windows platform looks in hindsight like a negotiating tactic that may have helped the Android-exclusive manufacturer get a 63 percent premium on its stock price in the Google offer.)

The markets may be reading the situation otherwise. As Business Insider reported this morning, RIM and Nokia were up pre-market "as the focus turns to Microsoft: Is it now forced to buy them?" Microsoft has reportedly considered buying Nokia before. Rather than emphasizing its newfound attractiveness to other device manufacturers, Microsoft may simply follow Google's lead and buy a partner.

One other interpretation of the deal is that Google was motivated to make some headway in its patent battle against Microsoft and Apple, which is costing handset manufacturers dearly.

Page made a note of the patent issue in his blog post, "Our acquisition of Motorola will increase competition by strengthening Google's patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies."

Even in the unlikely event that Google's primary aim was to shore up its patent defenses and the company plans to keep Motorola at arms' length, Google's smartphone manufacturing partners won't know for sure. And that's a break for Microsoft.


Posted by Scott Bekker on August 15, 2011


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