Google has struck its biggest-ever deal, announcing it will buy Motorola’s mobile phone business for $12.5bn (£7.7bn), to allow it to expand in the smartphone market and challenge Apple’s dominance. This is what analysts made of the move:
3:38PM BST 15 Aug 2011
“I think it’s all about patents. Google is moving to protect the Android community. The danger is that other handset makers feel disenfranchised. Motorola is the weaker player. This could actually collapse the entire community.
“It’s a lot of money. Our valuation is substantially below that price.
“Google isn’t interested in making money out of making phones. They’re interested in advertising.”
Carolina Milanesi, senior consumer devices analyst, Gartner:
“This can’t be just about buying a hardware company. Motorola has some core patents that will come in quite handy. It won’t stop apple going after them but it will give them a better bargaining tool.
“It could also help Google in the tablet market. They haven’t seen as much progress with Honeycomb as they would like.
“It is a lot of money but then who knows how much money they can save in the courts. It’s a great deal for Motorola.
“They tried with the Nexus line to become a manufacturer and it turned out to involve a lot more than they’d expected.”
Hendi Susanto, analyst at Gabelli & Co:
“Google and Motorola will create a stronger hardware – software integration to compete with Apple, Samsung, and HTC.
“I don’t see that it will face regulatory challenges. Having said that, other Android users (Samsung, LG, HTC) may voice concerns that Motorola may have inherited advantages such as tighter integration with the hardware and more knowledge of future Android platforms.
“Google has said that it is going to operate Motorola as a separate business, this should alleviate that concern but doubts may remain. Overall, I would still expect the transaction to close.”
Ben Wood, analyst at CCS Insight:
” [The deal] reduces reliance (for Google) on manufacturers and operators but will raise big concerns within the Android community, and could boost Windows Phone 7’s position.
“Access to patents is also a significant motivator. A hugely positive outcome for Motorola Mobility and CEO Sanjay Jha personally following the split into two separate companies in January.”
Jari Honko, analyst at Swedbank in Helsinki:
“Google clearly seeks to improve its platform’s competitiveness in the long run.
“I’m sure it’s Motorola’s IPR’s (intellectual property rights) that the company looks at here. Android device makers’ concern has been the fact that Google didn’t have any IPR portfolio.
“It is interesting to see how much Google will buy IPR and share it to the device makers in the future. It’s clear that they might look for more. But I don’t think Google would be interested in hardware business after this.
“This price should ring bells on how low Nokia shares currently are. And if you think of patents, now Nokia is the one with really strong patent portfolio.
“I’d expect this will boost the speculation whether Nokia would be a takeover target too.”
John Strand, founder and CEO of Strand Consult, Copenhagen:
“I don’t believe that Google wants to compete against Samsung, HTC, LG and Sony Ericsson.
“I think Google will withdraw from the hardware market. They get patents, software and people with knowledge about the mobile industry and sell the Motorola brand to a Chinese manufacturer.”
Colin Gillis, analyst at BGC Partners, New York:
“It’s a deal that will take time to pay off.
“They have a lot of cash, they want to chase after profit – Android has not been profitable.
“What is says is that Google wants to provide a total experience that’s hardware and software (like Apple).
“If you’re RIM, you just lost a potential acquirer.
“They do not need to do this – they’re just chasing new sources of profit.
“Motorola Mobility is not that good of a business. Hardware alone is not a money maker.”
Francisco Jeronimo, analyst at IDC, London:
“Samsung and HTC will now push further for Windows Phone as this move is making clear for them that they need to diversify their platform strategy. On the other hand this gives Google a huge patent portfolio as Motorola was a pioneer in the GSM.”