“They can’t be too thrilled to find that suddenly, these companies are no longer partnering with Google — they’re competing with Google,” Michael Gartenberg, director of research at Gartner, an information technology research and advisory company, said referring to the telephone makers. “No matter how Google tries to spin it, they’re competing.”
Google previously tried to enter the hardware business with its Google-branded Nexus One smartphone that it designed and sold through its Web site, rather than stores. The Motorola deal will help cement Google’s status as a mobile player, not only among competitors but also among consumers, said Gene Munster, an analyst with Piper Jaffray.
“It changes Google from being just the company they turn to for search,” he said referring to consumers. “It makes them the company delivering their mobile experience in a post-PC world.”
Others may try to strike out on their own and create operating systems, rather than risk becoming dependent on Google. Google stands to gain much from Motorola. Google also may be able to better integrate its services — books, music, games — into Android devices.
Analysts say that the move could bolster Google TV, Google’s poorly received attempt to wed the Web with home television sets. Motorola has a strong presence in the set-top box market, which Google could leverage.
Here's five things to know about Google's acquisition of Motorola Mobility:
1) Google is competitively going after Apple with this move.
Google's Android is the world's dominant smartphone operating system, but Apple's iPhone is easily the world's dominant smartphone. So now Google will have a hardware platform, as well as patent protection for integral parts of its Android operating system. Now, Google can go directly after Apple with its Android operating system and signature hardware products.
Now, Google will have a showcasing platform through Motorola Mobility for Android, and consumers can expect the company to exploit that relentlessly.
Consumers win big on this acquisition as long as Apple's iPhone pulls easily ahead with no single product as a rival -- the company could more easily hold on to higher pricing. Smartphones running on the Android system are already much less expensive across the board than Apple's iPhone, because there are so many competitive devices.
If Google can effectively establish a rival smartphone signature product line through Motorola that consumers can directly compare with Apple's iPhone, well, pricing will come down. Fast.
4) Google is becoming tangible.
No longer a bar of possibility, Google has taken a step towards becoming something tangible.
5) Apple will be the next to make an acquisition.
Google has been hoarding cash too, and now we see why. "It's hard to believe that Eric Schmidt was on Apple's board two years ago," says Colin Gillis as he tried to wrap his head around Google's $12.5bn (£7.6bn) deal for mobile handset manufacturer Motorola Mobility.
"Google is one of the few companies with the resources to challenge them. The deal, then, marks a radical departure for Google whose strategy so far has been to give away its Android software operating system to many of the world's major handset manufacturers. Android enjoyed a 43.3pc share of the global market in the second quarter compared to Apple, according to the latest figures from Gartner. Google insisted yesterday that Android software will remain open to all, a declaration that was publicly applauded by HTC and Samsung. In the increasingly litigious world of mobile technology, experts say the patents could prove vital as Google seeks to defend Android from allegations of infringements.
Google denies the charges.
"I've never seen anything like it," says Clayton Moran, an analyst at Benchmark who covers Google.