Google-Motorola: Sorting out the winners and losers

Google surprised many Monday with its announcement of plans to purchase business partner Motorola for $12.5 billion. The last few days have given the pundits time to ponder, and consider both the motivations behind the decision and what companies in this tightly intertwined industry have to gain or lose.

Expected winner, depending on whom you ask, have been said to be Motorola (a not-contentious position, as the company, with some off tablet mojo, lost tens of millions last quarter); Apple, despite being the competitor in Google's crosshairs; Android users Samsung, HTC and LG Electronics; and even, some say, Google.

Most likely to be anxious about the news? Google was the most-named company; followed by Android users Samsung, HTC and LG Electronics; Apple; and even Hewlett-Packard.

Nokia and Microsoft have also had their names tossed about these last few days, but by most accounts they're like the happy couple whose friends keep getting married and pressuring them to do the same: They can give in to pressure or proceed as planned.

The following is a collection of insights, analysis and opinions from around the industry. While iPhone battling and a need for patents have been popular topics on this front, some pointed to less-expected motivators, such as a play for the pay-TV market, and others shot back with rather dire predictions, such as Android, following Symbian, heading "the way of the dodo."

-- The deal has the potential to significantly drive growth of the Android platform over the next two years, said Yankee Group Analyst Carl Howe. But don't expect this to go smoothly. "We should expect bumps in the road — both big and small — in the process," said Howe. "Google’s biggest challenge will be both managing Android as an open platform while making devices for that platform, a feat no other technology company has previously achieved.”

-- IMS Research Senior Analyst Paul Erickson pointed out that Google's aspirations to enter the living room are well known, and Motorola Mobility is one of the world's "top suppliers of pay-TV set-top boxes, and has close relationships with a variety of large pay-TV operators worldwide."

He went on: "With Apple working on two-screen and three-screen integration, and with CE industry Android partners such as Samsung, LG, Sony, Vizio and others working on variations of the same, the insights gained and potential development benefits from a closer relationship to the pay-TV industry might be invaluable. The faster time-to-market, deeper level of integration, greater feature set, and higher level of functionality that would likely materialize in pay-TV tablet and mobile handset applications would benefit all Android hardware partners while providing an important competitive advantage against Apple."

-- Among the questions posed by IMS Insight analysts Bill Morelli and Josh Builta and Heath Lockett are, first, how will the carriers react to Google's new handset subsidiary and, second, how will the seven out of 10 top smartphone manufacturers currently investing in Android react? "Will Google offer its Motorola unit early access to new Android releases?" they asked.

Suggesting that the news may raise new speculations around a purchase of RIM, as other handset makers feel pressured to secure an OS of their own, the trio adds, "At present, Apple would appear to be the big winner from this increased uncertainty around the Android platform."

-- Should the deal find Google and Apple dueling with "iconic in-house devices," said SNL Kagan Senior Analyst Sharon Armbrust, "it puts pressure on other competitors to find mates as well. Microsoft has already linked arms with Nokia on an operational basis. HP will also be motivated to find a partner."

As for Android users HTC and LG, Armbrust sees a little good with the bad. They'll "necessarily view Google more warily, once it is bankrolling a key competitor," she wrote in a research note. "But they will also benefit from Google’s control of valuable patents to defend the community of Android device makers."

-- Where Armbrust expects wariness, Carsten Brinkschulte, CEO of messaging solutions developer Synchronica, fears something more severe. "Google will alienate tier-1 device manufacturers by directly competing with them," he said in a statement. "From a strategic perspective, Android may be on its way to becoming another Symbian, also an open-source operating system that had several manufacturers backing it, but went the way of the dodo because all of the tier-1 licensees turned their back on it when it became wholly owned by Nokia."

-- Simon Bickingham, CEO of app shop Appitalism.com, is also worried by the deal. "Moving from software into hardware is a significant risk as it moves Google into production and physical distribution and retail businesses while also putting them in direct competition with their customers," he said in a statement, summing up the deal as: "Surprising and challenging and distracting for Google, but great for Motorola."

Who's remaining positive? Verizon Wireless, the first carrier to comment, has given the deal a tentative thumbs up, according to the Wall Street Journal, which today reported that, while stopping short of totally endorsing the deal, it was hopefull that it may at least calm the patent tensions that have flared in recent weeks.

"We will be looking with interest as further details of the proposed transaction become clear," John Thorne, Verizon's senior vice president and deputy general counsel, told the Journal. "But, at first glance, to the extent that this deal might bring some stability to the ongoing smartphone patent disputes, that would be a welcome development."