Google's Motorola deal could be boost in rivalry with Apple

Computerworld - With official OKs from the U.S. Department of Justice and the European Commission on Monday, Google moved closer to finalizing its deal to acquire Motorola Mobility.

That could be great news for Google, which is looking to stretch its interests into more hardware ventures, and bad news for competitors like Apple.

"This is a big deal for Google as it paves the way for them to compete better in the smartphone and living room space," said Patrick Moorhead, an analyst with Moor Insights and Strategy. "Apple should be the most concerned in that Google can finally take advantage of software and hardware integration. This removes one of the final barriers to greater success to Google solutions and could deliver a more elegant solution -- more like we see from Apple."

On Monday, both the DOJ and the European Commission approved Google's plan to purchase mobile-phone, set-top box and tablet maker Motorola Mobility for about $12.5 billion. However, this doesn't mean the acquisition is a done deal. The plan still needs to get approval from officials in China, Israel and Taiwan.

The DOJ and the European Commission were two major hurdles, though.

Scooping up Motorola will be a huge boon for Google, which continues to make inroads into the home entertainment market with its Google TV platform. Motorola, a world-renowned smartphone maker, also is a major player in the home set-top box sector.

If the acquisition goes through, it is also expected to give Google one of the smartphone industry's largest patent libraries. The company is hoping to use the thousands of Motorola patents as it defends itself against patent infringement lawsuits over the Android mobile operating system.

"The impact from this deal may be even larger than just smartphones over time," said Dan Olds, an analyst at Gabriel Consulting Group. "Not many have talked about Motorola's set-top cable box business and their relationships with cable TV providers. Those boxes could be the keys to the living room for Google.... It would be relatively easy for Google to build [a home entertainment] system and, with Motorola, they already have distribution in place."

Also on Monday, there were reports that Google had developed a prototype device designed to stream music over home Wi-Fi networks.

In documents filed with the Federal Communications Commission, Google said that it's in the process of testing the device.

With an online music store and a music storage service already in place and a streaming music device in development, Google seems to be going after a chunk of the music and entertainment industry that Apple has dominated with its iTunes store and its array of iPod devices.

And with Motorola's set-top box technology, Google is positioned to turn a streaming music device into a broader home entertainment device -- one that could include TV.

"Google's first foray into [the home entertainment] market didn't go so well, mainly because the cable industry, the networks, and other content providers were against them," said Olds. "Now it's easy to imagine a deal that turns Google's enemies into allies... and moves the industry forward into the 'watch anything anywhere on any device' future."

And that means Apple should see Google's moves as a threat to its entertainment-focused iTunes business.

"In a lot of ways, iTunes is the lynchpin that provides so much content for other Apple devices," said Olds. "Apple's massive distribution footprint has allowed them to call the tune with record companies and other content creators. If Google were to jump into this market with a model that gives the content creators a solid platform, a huge potential audience, and a somewhat larger piece of the pie, they might look to make a move away from Apple and iTunes."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin or on Google+, or subscribe to Sharon's RSS feed . Her email address is sgaudin@computerworld.com.

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