August 16, 2011 / 12:00 AM / 7 years ago

Google's bold bet on Motorola could hit Asian handset makers

SEOUL, Aug 16 (Reuters) - Asian handset vendors such as HTC and Samsung Electronics could face pressure after Google Inc swooped in to buy Motorola Mobility Holdings Inc for $12.5 billion to help protect its fast-growing Android mobile operating system.

The acquisition of the company will transform the mobile landscape and give Google one of the industry’s largest patent libraries.

Wall Street quickly anointed Microsoft a winner in this deal, with Windows potentially benefiting if the acquisition alienates the 38 other phone makers that rely on Google’s Android.

“The deal will make most Android players realise how dependent they are on Google and how quickly Google’s plans can change their businesses,” said Francisco Jeronimo, an analyst at research firm IDC.

“Samsung, HTC, and Sony Ericsson may now look at other platforms as a way to diversify the risk of being so dependent on one platform.”

Google’s Android partners such as Samsung, HTC and LG Electronics officially said they welcomed a deal that will aid their own legal battles, but some analysts questioned the sincerity of those claims, noting that rival companies would now be unlikely to heavily promote Android since it would benefit a direct competitor.

Android held a 43.4 percent share of the smartphone market at the end of the second quarter, ahead of Nokia’s 22 percent, as per Gartner data. Apple ranked third with 18 percent, the data showed.

“Increasing their Windows Phones portfolio may now be a need in the long term... This acquisition may be the catalyst for companies to reduce their dependence on Google’s platform to face future market challenges,” Jeronimo said.

Asian handset manufacturers are increasingly turning to the free Android system, which is popular with operators and consumers in cut-rate markets.

The deal stoked immediate speculation that Nokia and Research in Motion — struggling device makers in a mobile arena dominated by Apple — would become takeover targets themselves, sending Nokia’s shares up more than 17 percent and RIM’s up more than 9 percent. (Writing by Anshuman Daga)

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