Google deal could boost Motorola
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China Daily, August 17, 2011
Google Inc's purchase of Motorola Mobility Holdings Inc for about $12.5 billion could give a boost to Motorola's handset business in China, while possibly pushing phone makers to adopt other mobile operating systems instead of Google's Android platform.
Google said on Monday that it would acquire Motorola Mobility for $40 a share, a 63 percent premium to the Friday close on the New York Stock Exchange.
"Google's acquisition of Motorola may make people believe that Motorola makes the best Android phones, which will lure more consumers to buy Motorola handsets," Kevin Wang, China Research director of iSuppli Asia Shanghai Ltd, said.
China is Motorola Mobility's second-largest smartphone market after the United States. Motorola Mobility said it sold about 2.2 million smartphones in China last year.
The company has been responsible for consumer device production since Motorola split into two companies (the other being Motorola Solutions Inc) in early January.
It has performed even better in China this year, selling 1.29 million smartphones, representing a 7.6 percent market share, in the second quarter alone, according to Beijing-based research company Analysys International.
Frank Meng, China president of Motorola Mobility, said the deal would benefit both sides.
"Motorola is 100 percent committed to the Android operating system. After Google's purchase, I think Motorola could achieve a better competitive edge in the global smartphone market," Meng said.
Marsha Wang, spokeswoman for Google China, declined to comment.
"If Google and Motorola together launch some mobile phones based on intensive cooperation, it will, without a doubt, pose a threat to other Android phone makers," said Lu Libin, a former Analysys International analyst.
The potential challenge is likely to make many mobile phone producers, such as HTC Corp and Samsung Electronics Co, turn to other mobile operating systems, Ovum PLC analyst Tim Renowden wrote in an e-mail to China Daily.
"The most possible operating system they will adopt is the Windows Phone platform, which is a powerful rival to Google's Android," he said.
Steven Yang, China president of Huawei Device Co Ltd, said there is a possibility that Huawei will turn to making Windows-based phones.
"But it all depends on customer demand," Yang said, declining to elaborate.
Huawei aims to be in the top three mobile phone makers worldwide by 2015. The company expects to sell 60 million mobile phones this year, of which 20 million will be smartphones.
Taiwan-based HTC, once a little-known contract manufacturer of handsets, has risen in recent years to become a global smartphone leader.
It entered the Chinese mainland last July and hopes to gain a bigger market share in the region, mainly through sales of Android smartphones.
"We welcome Motorola's merger with Google, and I don't think there will be a big change in the market," Dennis Chen, head of the Asia and China Enterprise department of HTC Corp said.
Chen said HTC is not betting on Android handsets alone, as the company made the world's first Windows phone with Microsoft Corp as well.
"Windows phones will continue to be a vital part of HTC's product portfolio."
Wu Qianghao, marketing director of ZTE's mobile phone department, said that although almost all the smartphones that ZTE now makes are Android-based models, the company will try to diversify its operating systems in the near future.
"For example, we may produce Windows phones, or even develop our own mobile operating system," he said. ZTE Corp aims to ship 12 million smartphones this year.
Some Chinese companies are launching self-developed mobile operating systems, and analysts said they expected that Google's purchase might create opportunities for these new platforms.
Yang Lei, public relations director of Alibaba Cloud Computing, Alibaba Group Holding Ltd's unit responsible for the mobile operating system business, said it is possible that more phone makers might use Alibaba's Aliyun operating system. Yang said some big Chinese phone makers are approaching Alibaba for possible cooperation, but he declined to reveal the names.
