Google (Nasdaq: GOOG)'s $12.5 billion acquisition of
Motorola Mobility LLC will have implications for
Microsoft Corp. (Nasdaq: MSFT)'s Windows Phone ecosystem, but whether they're good or bad remains to be seen. (See
Google Buying Moto Mobility for $12.5B ,
Google Plays Favorites With Moto Buy and
Google Bringing Order to Android.)
As to what the deal means for Microsoft right now, the answer is a small 1.3 percent boost in its shares to $25.43. And, its main handset partner
Nokia Corp. (NYSE: NOK) also shot up 14 percent to 4.27 Euros immediately following the news.
But longer-term, opinions seem to be split on whether this is the
big break Microsoft needed or the deal that'll
break its business model.
"It is interesting because a lot of the third parties are looking at their situation trying to figure out who is the lesser of two evils," says
Gartner Inc. analyst Michael Gartenberg. "It's not like Steve Ballmer's number is automatically on speed dial because of Nokia. On the other hand, a lot of them may be looking at Microsoft saying, 'They may have a close relationship with Nokia, but at least they don't own them.'"
That may not remain the case, however. The Google-Moto tie-up is adding fuel to speculation that Microsoft will and should acquire Nokia rather than just rely on their partnership. But even if it doesn't make that leap, Microsoft can still position itself as the only OS that's entirely hardware independent. Google's big buy could have more handset makers turning to Windows Phone to diversify their portfolios away from the now less neutral Android.
Samsung Corp. ,
High Tech Computer Corp. (HTC) (Taiwan: 2498),
LG Electronics Inc. (London: LGLD; Korea: 6657.KS) and many others rely heavily on Android's open OS. Even if Google makes good on its promise to remain open, its close ties to Motorola could make most think twice on betting the farm on that promise. (See
Why Windows Phone Will Beat Android.)
That would be good news for Microsoft as chances are pretty good Motorola won't ever add support for Windows Phone as it had once considered doing. In fact, Google CEO Larry Page wrote in the company's
blog about Moto's "total commitment to Android" and said that it was betting solely on the OS.
Perhaps even more disconcerting to Microsoft, however, is that Google's new patent prowess could mean it loses Android royalties, which
reportedly bring in more revenue to the company than actual device sales. Microsoft will certainly have a much harder time suing Android makers for patent infringement if the deal goes through.
— Sarah Reedy, Senior Reporter,
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