A number of analysts believe that Google buying Motorola will help Windows Phone 7, because it will chase current Android manufacturers into the arms of Microsoft and its smartphone OS. Here's why those analysts are wrong.
Some analysts' thinking goes this way: Device manufacturers believe that Google will favor Motorola in future Android developments, and in response, they will develop Windows Phone 7 devices.
Jamie Townsend, an analyst with Town Hall Investment Research, for example, wrote in a report that:
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.
Forrester's John McCarthy writes this on his blog:
If Microsoft passes on the Nokia aquisition, this deal could throw Windows Mobile a temporary life-line. Forrester can hear Steve Balmer and company pitching the Asian players on how Microsoft is the only hardware agnostic player left and that HTC, Samsung, and LG should increase their support for Windows Mobile as protection against Google favoring its own hardware play.
At first glance, such thinking makes some sense. But the more you dig into the argument, the less sense it makes.
You can be sure that Google did plenty of due diligence before the deal, gauging the reaction of current Android phone makers to the acquisition. Google knows there's no way that Android can succeed with the support of only Motorola and not other device makers. Google has succeeded spectacularly with its "let-a-thousand-phone-makers-bloom" business philosophy for Android. It wouldn't make a $12.5 billion bet to endanger that.
After the deal was announced, manufacturers of Android phones lined up behind Google to support the deal, citing the patent protection it would afford Android due to Motorola's considerable patent portfolio. Peter Chou, head of HTC, for example, said
"We welcome the news of today's acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem."
Other manufacturers of Android devices echoed what Chou said. It was clearly an orchestrated effort by Google. But the point is, the manufacturers went along with it. And they went along with it for a simple reason: Android has become their bread and butter. The Motorola deal doesn't change that.
In addition, they're right about the deal possibly offering them protection against lawsuits. Computerworld quotes Alexander Poltorak, chairman and CEO of General Patent Corp., saying that because Google will get the Motorola patent portfolio that
"[Competitors] Will think twice before filing a complaint, because they can be guaranteed Google will strike back."
Here's what the Financial Times says about that (free registration required to follow this link):
The hope is that Google may license Motorola's patents to other Android phone makers, thus strengthening their patent positions. The weight of Motorola's patents now backing up Google could also give Android phone makers an upper hand when negotiating with other patent holders such as Apple or Microsoft.That line of thought appeared to outweigh fears that Google, which will become a direct competitor as well as a partner, could favour Motorola over other hardware manufacturers.
Investors seem to agree. In Tuesday, because of the promise of such patent protection, the stock prices of Samsung and HTC, two big Android device makers, jumped in Asian markets, with Samsung up 6.1 percent and HTC up 3.1 percent.
There are other reasons that the deal will hurt Windows Phone 7, including that it will likely stop Motorola from manufacturing Windows Phone 7 devices.
The upshot of all this? Windows Phone 7 comes out a loser if the deal goes through, not a winner.