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Local handset makers brace for Google’s Motorola buy

Aug. 16, 2011 - 19:48 By
With Google Inc. inking a deal with Motorola Mobility to acquire the mobile phone maker for $12.5 billion Monday, local handset makers are bracing for changes the surprise takeover is expected to bring.

While it was seen as positive in terms of patent protection for Android-powered smartphones because Motorola is the owner of over 16,000 telecommunication-related technology patents, many industry experts viewed Google’s move as a clear signal to jump into the global mobile phone market.

“In the long term, handset manufacturers will be needed to be equipped with their own proprietary platforms as Google might become the next Apple Inc.,” said Chun Sung-hoon, an analyst at Hana Daetoo Securities.

Google’s partnership with a number of mobile phone manufacturers such as Samsung Electronics, LG Electronics and HTC, however, is unlikely to see drastic changes since Google needs their assistance to gain the ground for industrial expansion.

Motorola’s total shipment of mobile phones was numbered at 10.22 million ― of which smartphones took up 4.4 million ― from April to June, taking over 2.4 percent of the global market and being placed at No. 8.

Samsung Electronics sold 20 million smartphones in the second quarter, while LG Electronics and HTC closed their sales of smartphones at 6.15 million and 12.1 million during the same period, respectively.

“We don’t believe Google’s takeover of Motorola will be such a big issue since it was an event that was already predicted,” Samsung vice chairman Choi Gee-sung told reporters in Seoul on Tuesday.

“Samsung could also make use of our own proprietary platform (Bada) and Microsoft Windows mobile operating system ... The mobile business is not solely about the OS.”

Park Jong-seok, president of LG’s mobile communications company, sent a message to Google, indicating it welcomed the Internet giant’s commitment to defending Android and its partners (in regards to patent protection). But another LG official said the firm needed more time to evaluate the exact impact of Google’s acquisition of Motorola.

LG Electronics and Motorola are most likely to fight to grab the No. 3 position in the global Android-powered smartphone market, following Samsung Electronics and HTC.

Although Google’s chief executive Larry Page reiterated the company’s commitment to running Android as an open platform and run Motorola as a separate business, Google is expected to have the Motorola mobile phones initially test its new services, according to industry insiders.

“The competitors will be a step behind in terms of learning Google’s know-how on technology support in the early stages of development,” said Lee Soon-hak, an analyst at Mirae Asset Securities.

“This will negatively affect the manufacturers of Android-powered handsets in the short term.”

Lee also warned investors to remain cautious in making investments in LG Electronics for the time being since the company will inevitably be impacted by the Google-Motorola deal and LG’s profit figure in the smartphone sector may weaken as a result.

“The company was expecting a turn-around in the fourth quarter and it might take place because that period is only months away, but the impact is projected to occur later,” he said.

Shares of Samsung Electronics and LG Electronics closed at 750,000 won and 65,000 won per piece, respectively, on Tuesday.

By Cho Ji-hyun (