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Google's Motorola Deal May Boost Android Ecosystem

Google's Motorola Deal May Boost Android Ecosystem
By Jennifer LeClaire

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Speculation about Google's plans for Motorola Mobility continues, with some indications that it could mean a better Android ecosystem to challenge Apple. With Motorola, Google gains product-development expertise to set the pace for Android manufacturers and move beyond smartphones. And the Motorola deal could help address Android fragmentation.
 


Since Google announced its plans to acquire Motorola Mobility for $12.5 billion on Monday, analysts, stockholders and developers have been discussing the implications, and the talk hasn't slowed as the weekend nears. Speculation has included the winners and losers in the deal; a closed Android operating system; and how the deal ultimately helps Microsoft.

Let's start with Google's motives for the purchase. While many analysts point to Moto's patent portfolio, Tina Teng, a senior wireless analyst at IHS, suggested Motorola's product-development capabilities may have made it an attractive target for Google.

"Motorola has been closely following Google Android's operating-system release schedule," Teng said. "Whenever Google releases a new version of Android, Motorola almost immediately has a device ready with the latest revision of the software, reflecting the company's prodigious product-development capabilities."

Beyond Smartphones

Teng noted how Google previously has used new HTC and Samsung products to demonstrate the latest capabilities of the Android operating system. For example, the HTC MyTouch and Samsung Nexus S served to show off the operating systems' capabilities so other OEMs could follow the example. If the Federal Trade Commission approves the acquisition, Motorola will become the company to set the example.

"Motorola can serve as Google's product R&D department as Android spreads into new markets," Teng added. "Motorola has engineering expertise in a wide range of products where Android will be used, including set-top boxes and televisions. The addition of Motorola's engineering and intellectual property will accelerate Android's time-to-market in these areas and potentially revitalize the Google TV business, which so far has met with little success."

Indeed, Google CEO Larry Page hinted at possibilities beyond smartphones in his Monday blog posting. Specifically, he noted how Motorola is a market leader in the home-devices and video-solutions businesses.

"With the transition to Internet Protocol, we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space," Page said.

A Stronger Ecosystem

Here's another angle: According to Strategy Analytics, more than 70 percent of consumers agreed that mobile apps would be extremely important when purchasing their next handset. With the Motorola acquisition, the firm said, Google can now rival Apple's ecosystem.

Strategy Analytics' premise is that Apple built the iOS ecosystem on the strength of hardware and software releases that work together. Apple's development paradigm led to innovative apps and a platform that focuses more on experience than technical specifications. Although Google has innovated consistently with the Android platform, the firm noted, it has failed to effectively tie software upgrades to new hardware that developers could leverage to create new apps.

While other factors certainly played a critical role in the selection of Motorola as an acquisition target, Strategy Analytics said Google will be able to leverage the purchase of Motorola to address three critical flaws with Android: A subpar ecosystem for consumers and developers, APIs that are not specifically focused on improving usability, and fragmentation.

"Providing developers with an environment in which they can succeed will be critical to building long-term support -- support which is essential to consumer interest," said Josh Martin, director of apps research at Strategy Analytics. "If handled correctly, the acquisition of Motorola could help Google make Android into a platform that offers unrivaled revenue opportunities. But this acquisition is not without risk."
 

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