August 15, 2011, 2:52 PM — With most acquisitions, there are winners and losers. Google's buy of Motorola is no different, but in this case, neither of those companies comes out a winner, analysts say. "
Instead, some believe that Microsoft may get the biggest boost from the deal.
The US$12.5 billion acquisition, which Google announced Monday, has left some analysts scratching their heads. While Google maintains that Motorola will run as an independent company, Google is now in the position of essentially competing with its own customers. That new reality could drive handset makers like Samsung and HTC to consider other operating systems, namely Microsoft's Windows Phone.
"Competing with licensees is always the best way to increase an ecosystem, and the sarcasm there is entirely implied," said Avi Greengart, an analyst with Current Analysis. "It's incredibly difficult and few have done it successfully."
Samsung and HTC, two of the largest Android users, are unlikely to be pleased by the news of the acquisition. "We expect that this acquisition is not being met with much joy in Korea or Taiwan. If Android is going to continue its growth as an OS then the continued heavy focus by HTC and Samsung appears to us as a necessity. We expect that focus is now at some risk," Jamie Townsend, an analyst with Town Hall Investment Research, wrote in a report Monday.
With each new release of Android, Google has favored one vendor that gets the release before the others in exchange for using all of Google's services on the device. HTC, Motorola and Samsung have all been favored partners at different points. But going forward, it's unlikely that Google will offer the first release to any vendor but Motorola, said Chris Hazelton, an analyst with The 451 Group.
"I find it hard to believe that Google will say, 'OK [Motorola] colleagues, you're on the bench. This round is going to go to Samsung or HTC,'" Hazelton said.
While Google posted a Web page with quotes of support from Samsung, HTC, Sony Ericsson and LG, those companies couldn't have come out in opposition to the deal, Greengart said.
"The reason why you don't see anybody objecting to this -- they're all offering qualified support -- is because they don't have any choice. Not in the short term. You're not going to bash Android when your fourth-quarter earnings are all going to be Android-based," said Greengart.
Handset makers spend around a year developing new phones and so in the short term, not much will change in terms of their Android phone releases, Hazelton said. But handset makers are surely today taking a look at phones that are in the pipeline. "People are probably going back to the drawing board saying, hey, will we launch this Android device," he said.