Monday, August 15, 2011 at 9:43 am.

Google-Motorola: Winners and losers

Google’s move to acquire Motorola for $12.5 billion will shift some of the power and balance in the mobile industry. Here are some of the initial winners and losers:

Winners

  • Motorola and Sanjay Jha: Let’s be honest — the comeback wasn’t going great. It was going okay, especially when Verizon made the Droid campaign its focus, but it’s not like Motorola was really doing anything special these days. CEO Sanjay Jha (pictured) was able to take advantage of Google’s thirst for patents, bring home a big payday, and now he can try to focus on building awesome products and services, and not on capitalizing the company. And with a big win behind him, if things don’t work out, he can always blame it on Google.
  • Carl Icahn: His long, slow slog to split Motorola in half was likely crucial in Google’s decision to buy Motorola Mobility (cellphones and set-top boxes) and not Motorola Solutions (enterprise, government, and public safety infrastructure). And over the weekend, his MMI holdings increased in value by $415 million. But there was a lot of pain on the road there.
  • Consumers: There is a good chance that Motorola devices will be much better than before, potentially delivering better, cooler technology at lower prices. This would be great for consumers. The patent protection that Motorola could provide other Android companies could also benefit consumers in the form of lower prices. On the other hand, there is also a solid chance that the new Motorola will implode, removing a competitor from the market. But that shouldn’t have much of an impact on consumers — there are a lot of phone makers out there.
  • America: All of the momentum in Android was heading to Asia: Samsung is Korean, HTC is Taiwanese, and look out for whatever ZTE and Huawei build in China. This could give an American legacy company a brighter future in the handset business. Change we can believe in. Or something.

Losers

  • Apple: This isn’t a huge loss right away, and it may end up not mattering much at all. Apple mostly loses patent leverage against Android, and now Google is in the position to directly compete with integrated hardware and software devices, in smartphones, tablets, and set-top boxes. To be competitive, Google and Motorola will first have to design amazing integrated products first, which neither has really done before. (And the whole thing could implode.) But the risk increases, especially if Google and Motorola use this new burst of motion to hire some designers and engineers from Apple.
  • Microsoft: Motorola is now unlikely to become a Windows Phone 7 licensee, and Microsoft is likely to lose patent leverage against Android makers. And now Microsoft may have to make a big move, like buying Nokia or RIM. The potential upside is if Google can scare some of Motorola’s competitors away from Android, deeper into the Windows Phone camp.
  • RIM: Motorola and Google could do something cool and enterprisey with Google Apps and Gmail that could come close to rivaling RIM’s BlackBerry system for big companies. Phones with plastic keyboards and Android apps, back-end support, etc. And then RIM’s best customers could run away. The bright side is that someone might now get excited and buy RIM.
  • Cisco: All of a sudden, Motorola’s set-top box division has a real software company behind it. Google TV 2.0?
  • Chicago: Motorola was already doing a lot of its Android work out of Silicon Valley, where Google is also based. It seems unlikely that the company will be doing any major future expansion in the Chicago suburbs, but we’ll see.

Too early to tell

  • Google: First let’s see how long this deal takes to get through, what it looks like after that happens, and how well Google can adapt to its new ownership situation. This could be a huge victory, a huge disaster, or anything in between, and no one knows yet which it will be.
  • Samsung, HTC, and other big Android licensees: You’d think these guys would all be losers today. But it looks like they will be getting legitimate patent protection out of this. The question now is how much of an unfair advantage Google will give Motorola in terms of access to Android software and exclusive features and services. If the answer is “little to none,” then the competitor partners are still in great shape — the mobile industry is massive, and there’s no way Motorola is going to take all of it, especially if Motorola’s device quality stays where it is today (not great). If Google does give Motorola any big, “unfair” advantages, then the Samsungs and HTCs of the world may start looking for new opportunities.
  • Mobile carriers: If Google and Motorola can push the price of smartphones down even more, and if carriers can accelerate the uptake of mobile data plans, this could be good for them. But there’s also the chance that Larry Page has a long list of wacky, disruptive ideas he wants to try, focused around handset distribution and pricing, ad subsidies, etc., which could take real leverage away from carriers. Their path toward dumb pipe status seems to be increasing by the deal. This will likely end up better for consumers but could be annoying for the carriers.

Earlier: Google buys Motorola, patents, and an Android business model for $12.5 billion