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China blesses Google's Moto buy, patent problems persist

Chocolate Factory must achieve fine balancing act

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Analysis Google has finally won approval from Chinese anti-trust authorities for its $12.5bn takeover of handset maker Motorola Mobility, removing the final major obstacle to the deal, but analysts believe the securing the long-term success of Android will be the Chocolate Factory's priority, rather than producing hardware.

China apparently gave the official go-ahead on Saturday, finally putting to rest any fears Google may have had that its strained relationship with the Communist superpower, after it pulled its search operation out of the country in 2010, could influence the decision.

US and European regulators decided in February that the deal posed no threat to competition in the smartphone market.

However, according to a note on the web site of the Ministry of Commerce translated by Reuters, the regulators have required Google to keep the Android platform free to all for at least the next five years, apparently in response to fears Google could favour Motorola over other manufacturers in developing future iterations of the software.

"At the end of the five years, the Ministry of Commerce will continue to assess the state of the Chinese smart phone operating system market," the statement reportedly noted.

It’s highly unlikely, however, that Google would do anything to drive away its ecosystem partners to rival platforms like Windows Phone.

In fact, one of the major reasons for Google's Motorola acquisition was the firm’s treasure trove of 17,000 patents. Google hopes that mountain of IP will buffer Android against future litigation attempts by the likes of Apple in the increasingly fractious mobile platform market.

It has already been stung by Microsoft, which is gradually working its way through all the major Android handset vendors, forcing them to pay royalties to Redmond on every device they sell.

As for Google’s device roadmap, very little has been revealed by the Chocolate Factory thus far, apart from the following, from an open letter to investors by CEO Larry Page last month:

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.

It could be that Google was waiting for the Chinese all clear before announcing anything, or even that the firm is not actually planning a big splash in the hardware space anytime soon.

A Gartner report from last October predicted that Google would use Motorola to showcase some phones for Android, but that it would have no hesitation in selling if it “obstructs Android’s appeal to manufacturers”.

“Google will introduce low-priced, advertising-supported Android phones. These will not grab share in the high-value phone market, but will further erode Symbian's share,” the report claimed.

Huawei for one has already been linked with a potential swoop for Motorola.

Android a hit in China

Ian Song, research manager for IDC, told The Reg that the next five years could be crucial for Android.

“By placing a five year requirement on making Android free, other vendors so dependent on Android could have some breathing room to observe Google's Motorola integration efforts and decide if they want to stay on the Android bandwagon or go with other routes,” he added.

“I believe that it is in Google's best interest to keep Android free and open source. With Motorola Mobility’s assets, Google can effectively create differentiated devices that goes head to head with Apple and Microsoft products and at the same time have most of the world running on Android.”

Gartner research director Sandy Shen agreed that Google wouldn’t do anything to upset its handset partners in China, the biggest mobile phone market in the world, where Android is on nearly 70 per cent of all smartphones.

“Given Motorola is not a strong player in China it would take a while to see an impact on its market share anyway,” she told The Reg.

“Google realises the importance of its OEMs. It will be very careful – it’s walking a fine line and won’t want to disengage them.”

Google is also continuing to work very closely with Samsung on the production of Nexus handsets, a relationship that remains important to both parties but could be put under strain depending on what comes out of Motorola. ®

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