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Wednesday, August 17, 2011

How will the Google-Motorola deal affect mobile payments?

Google Inc.'s purchase of Motorola Mobility Holdings Inc. could alter the mobile phone market landscape. It could also change the perception of Google as a search engine to potentially becoming known as a major mobile device manufacturer, software developer and retailer on par with Apple Inc.

But the merger may hinder ISOs and merchant level salespeople in determining which mobile payment platforms will best serve their needs. And it may take years before the feet on the street will be able to confidently lead their merchant clients to the best mobile payment solutions.

The buy

Google recently paid $12.5 billion cash for Motorola Mobility. Analysts universally admit they can only guess at Google's reasoning behind the buy. They believe Google, maker of the Android mobile platform, is protecting itself from patent infringement claims against Android by purchasing more than 17,000 patents in the Motorola acquisition.

Analysts also accept Google's statement that Motorola Mobility "will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business." Thirty-nine device manufacturers and 231 wireless carriers use the Android platform.

"Motorola's total commitment to Android in mobile devices is one of the many reasons that there is a natural fit between our two companies," Google Chief Executive Officer Larry Page wrote in his blog. "Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere."

Next steps

Speculation about Google's further intentions ranges from direct competition with Apple, including proprietary software unavailable to Google's Android partners, and a foray into new hardware and software that will make tablets and phones work like televisions.

"Our vision for Android is unchanged, and Google remains firmly committed to Android as an open platform and a vibrant open source community," Google Senior Vice President Andy Rubin said. "We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices."

Android partners generally customize the platform to their smart phones. A proprietary Google-Motorola phone would directly challenge the Apple iPhone with its vertical integration and ease of use. It would also give Google more authority over development, pricing and distribution of its products. A custom, innovative mobile device would put Google in direct competition with its Android partners.

Partner support

Nonetheless, all handset manufacturers that are Android partners issued statements supporting Google's acquisition. These include statements from the CEOs of Samsung Electronics, Sony Ericsson Mobile Communications, HTC Corp., and LG Electronics – all of which are now potential competitors with the Google-Motorola entity.

Until Google allows the world to see how it will develop its Motorola assets, it is impossible to determine now whether Google's partner manufacturers will be in direct competition with Google or if they will remain partners on an equal footing with Motorola.

A New York Times article about Google's Motorola purchase written by Evelyn M. Rusli noted, "The effect of a Google-Motorola Mobility merger on consumers is unclear. Google has shaken up the mobile industry by pushing cell phone carriers to open up their networks, and by licensing its Android system at no charge, increasing competition. With the Motorola deal, analysts said, Google may be able to accelerate innovation in smart phones and tablets."

Analysts have stated the Motorola deal may result in mobile device manufacturers turning to a Microsoft Windows platform, further muddying the waters, or even spur them to develop their own operating systems.

All this means mobile payments will take a back seat while consumers and manufacturers work out which devices best serve their needs. end of article

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