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Chinese whispers point to Huawei bid for Motorola

Google could take the patents and run

The smart choice: opportunity from uncertainty

Huawei remained tight lipped today on rumours that the Chinese handset giant is set to sign a deal for ailing mobile biz Motorola just eight months after Google splashed $12.5bn on acquiring the firm.

The Chinese telecoms equipment maker, which has ambitious growth plans for its global handset business, told The Reg it had no comment on the rumour, although analysts have said a deal could make sense for both parties.

A Wall Street Journal article citing unconfirmed, swirling rumours from Asia makes the case that Google hasn’t really known what to do with the mobile phone maker since it made the biggest acquisition in its history last summer.

With the deal having finally been given the green light by regulators in the US and Europe, there’s been little noise from the Chocolate Factory, aside from the briefest of mentions in an open letter to investors by CEO Larry Page last week:

We are excited about the opportunities to build great devices capitalising on the tremendous success and growth of Android and Motorola’s long history of technological innovation. But it’s important to reiterate that openness and investment by many hardware partners have contributed to Android’s success. So we look forward to working with all of them in the future to deliver outstanding user experiences. Android was built as an open ecosystem, and we have no plans to change that.

In this paragraph is perfectly encapsulated the problem facing Google.

On the one hand it is attracted by an Apple-lite model which would see it control more of the Android ecosystem – software, hardware and services – but on the other it can’t afford to anger partners such as Samsung and HTC which have helped catapult Android to become the world’s most popular smartphone OS.

The WSJ article makes the point that Google can’t realistically do both unless the companies operate completely separately, and it certainly can’t afford to displease its Android partners who allow Google services to be pre-loaded onto hundreds of thousands of handsets every day.

Having acquired the 17,000-odd Motorola patents which commentators have claimed was Google’s primary reason for buying the firm, the web giant could conceivably look to walk away if made the right offer, although it’s a pretty murky picture at present, according to IDC analyst Melissa Chau.

“It could go either way and it’s just not clear whether it wants to get rid or keep Motorola,” she told The Reg.

“Google doesn’t have a hardware background so it’s unclear what it wants to do with it.”

Google's reluctance to release more information on product roadmaps could also be a ploy to keep onside with its Android partners, however, she added.

On the other side, Huawei could stand to gain by acquiring a handset manufacturer to help boost its own brand value in non-Chinese markets, said Chau.

“Huawei has not seen the growth it needs from other places and it needs to focus on Europe and the US, but operators tend to mask the Huawei brand because there is still a certain perception about Chinese brands in terms of quality and innovation,” she argued.

“Having the Motorola brand could help them in this … I could imagine either co-branded phones or ‘powered by Huawei’ devices.” ®

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