Strategic move could have implications for Android handset market and GoogleÂ’s mobile Wallet plans

Strategic move could have implications for Android handset market and Google’s mobile Wallet plans

Google agreed late yesterday to buy the loss-making Motorola Mobility Holdings for $12.5 billion (£7.6bn).

This gives the search giant a more significant direct involvement in the design and production of mobile phone hardware and shores up a valuable intellectual property portfolio during a time when legal manoeuvring through patent holdings is plaguing the Android mobile operating system (OS) market, according to analysts.

Communications analyst ABI Research said a number of repercussions will result from this acquisition if it goes through. The Android platform is on its way to becoming the eventual leading OS in the smartphone market due to its wide original equipment manufacturer (OEM) support from the likes of such as Samsung, HTC, LG and Sony Ericsson.

From a retail perspective, this may also have implications for Google’s mobile Wallet ambitions, where it launched the service in the US on its own Nexus S 4G smartphone this May.

Impact on OEM Android development

The analyst asked whether the growing support for Android will change now that Google will be in direct competition with its licensees. Will the likes of Samsung, Huawei or even HTC adjust their strategies by emphasising a competing platform? How will it affect Android future development? Android innovation relies on the contributions of its licensees, does it all freeze while this settles and how well can RIM and HP capitalise on this opportunity?

“Google has been relatively silent through the many legal problems its licensees have faced in defending Android,” said Kevin Burden, ABI Research mobile networks vice president and practice director. “All its licensees are now feeling their legal positions have just been reloaded, but their allegiance to Android may be more at risk.”

Beyond mobile phones and media tablets, the analyst said Motorola Mobility has a healthy business in the digital home, namely broadband cable modems and set-top boxes. Its strategy has been to promote a “TV everywhere” solution.

Google, in contrast, had its foray into this space with Google TV seen widely as an experiment. A tie-up between Google and Motorola could give Google the expertise it needs to be taken seriously and gain an eventual foothold in content deliver to the home.