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Is the Google-Motorola deal good for business?

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Internet giant Google announced yesterday that they had acquired Motorola Mobile for a very cool $12.5b. While it might seem like a logical business transaction for most, the deal could have a couple of unwanted consequences for handset manufacturers like HTC, Samsung and Sony Ericsson.

Motorola's latest handset, the Atrix (image: Motorola)

Google is the maker of the popular Android operating system, which powers HTC, Samsung and Sony Ericsson smartphones. If Google has the capacity to buy Motorola Mobile in order to protect its Android OS, where does that leave the other phone makers?

With the deal comes one of the industry’s largest patent libraries and Google is sure to take full advantage of it. But the deal will just once again highlight how dependant HTC, Samsung and Sony Ericsson are on Google. This might prompt them to look at another OS in the future, just so that they can diversify their offerings and prevent themselves from being swallowed up by Google.

The major problem with the deal comes in the form of direct competition. “Google’s Android partners such as Samsung, HTC and LG Electronics officially said they welcomed a deal that will aid their own legal battles, but some analysts questioned the sincerity of those claims,” Reuters wrote.

If HTC or Samsung heavily promote the Android OS, they are indirectly advertising Motorola Mobile as well, which isn’t a good thing – not for their business at least.

The only option left for other manufacturers might be to increase their stable of Windows 7-based handsets, and steer away from Google a bit. “Increasing their Windows Phones portfolio may now be a need in the long term… This acquisition may be the catalyst for companies to reduce their dependence on Google’s platform to face future market challenges,” Francisco Jeronimo, an analyst at research firm IDC, told Reuters.

But not everybody is unhappy about Google’s takeover. Since Google is in a buying mood, there is speculation on the markets that the giant might have Nokia and Research in Motion in their sights, which caused Nokia’s shares to rise by 17%, while Canadian-based RIM’s share increased by 9%.

If Google decides to take over Blackberry-maker RIM, it would be a huge boon to them, as they would own two hugely-successful handset manufacturers, as well as the most popular operating system.

Their only real competition would then be Apple, who recently rose up to be the most valuable company in the world.

Charlie Fripp – Consumer Tech editor

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