Google tough enough to walk on razor's edge

Google's continuing pursuit of a multibillion-dollar takeover of Motorola Mobility shows its intention to spread its wings - but it is a fine balancing act.

If Google's move to buy Motorola Mobility pays off, it will be able to make its software and new devices endemic. Above, a Motorola booth in Las Vegas. Isaac Brekken / AP Photo

Google's ongoing US$12.5 billion (Dh45.91bn) acquisition of the mobile phone and set-top box maker Motorola Mobility clearly positions it as a rival to handset makers such as Samsung.

The move would also enable Google to make inroads into television.

The takeover of a mobile phone maker is likely eventually to enable Google, the internet's biggest search engine, to provide devices such as smartphones powered by its Android software without recourse to third-party manufacturers such as Samsung and HTC.

After news that Google was buying a phone-making unit, Samsung lost little time in doing a deal to run its own in-house Bada software on Intel chips. Although the South Korean giant is reputed to be the world's largest technology company by sales, it has become increasingly reliant on the Android smartphone software.

At the moment, Bada accounts for only a tiny percentage of the smartphone market, and Samsung will face a big challenge in making its new Bada-based Intel smartphone platform, called Tizen, a serious rival to Android.

However, industry watchers think Google may start slowly in its approach to displacing third-party manufacturers and developing a new generation of smartphones powered by a new version of Android software.

"Google's objective for now is to have a wide and open ecosystem with different device makers," says Thomas Husson, a principal analyst at Forrester Research. "They could go a different route and provide some exclusive features and more unique experiences for Motorola but will do so cautiously, at least in 2012, not to upset the Android partners.

Tim Shepherd, a senior analyst at the research company Canalys, agrees.

"I suspect that the Motorola acquisition will go through in the coming months, but I do not expect to see any radical change in the way Google interacts with Android partners as a result," he says. "In fact, quite deliberately, I expect Google to be stressing that Motorola will not be gaining time-to-market advantages on new versions of the platform, in order to reassure and placate other key Android vendors such as Samsung and HTC.

"Without their commitment, Android would lose momentum and growth potential."

Tony Cripps, an analyst at the research company Ovum, says Samsung is more than just defending its position with the changes to its own software.

"Samsung's beefing up of its own operating system, Bada, is not merely a response to Google buying Motorola Mobility but Samsung positioning itself as a key determiner of future consumer buying behaviour," he says.

Google's strategy in acquiring Motorola Mobility goes well beyond the mobile-phone market. Having already made inroads into the smartphone market with Android, it may be willing to continue to work closely with smartphone makers in the short term, while trying to attract advertisers to a new platform such as TV.

By running its Android software on a range of devices, Google also hopes eventually to introduce interoperability among smartphones, tablet computers and TV sets. This would enable consumers to transfer content such as TV programmes or games among the devices.

"The company still wants to push the envelope a bit more with its Android software than its smartphone partners are willing or able to go, especially towards greater integration between smartphones, tablets and TVs," says Mr Cripps.

The US giant's move to buy Motorola Mobility may partly have been a result of its frustration at manufacturers not being willing to adopt a more widespread use of Android software.

"This is an area where Motorola's experience with set-top boxes and relationships with cable operators will prove valuable and could provide Google with an opportunity to more fully realise its ambitions to deliver integrated multi-screen services," Mr Cripps says.

Mr Husson points to other advantages for the company.

"Bear in mind Motorola's acquisition also helps Google access a wide range of patents and assets beyond the mobile-phone unit, in particular set-top boxes, which makes a lot of sense in the context of Google TV plans," he says.

Traditionally reliant on advertising revenue, Google now has its sights firmly set on the world's biggest advertising market: television. It hopes to use a new generation of set-top boxes running its Android software as a bridgehead into this lucrative market.

"The TV has long been an inevitable destination for Google. The largest proportion of advertising spend globally still goes on reaching consumers through TV channels, and Google has little choice but to try and carve out a piece of that market for itself, especially as different media converge," says Mr Cripps.

If Google's $12.5bn gamble in buying Motorola Mobility pays off, it will be able to make its software, services and new devices endemic - not only on the desktop and in the pocket or purse but also in the living room.

But for this year, Google will be walking a razor's edge developing its own manufacturing arm while trying not to alienate its industry partners such as Samsung too quickly.