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Two men use mobile phones as they wait outside a department store in Hong Kong August 16, 2011.
Credit: Reuters/Bobby Yip
By Miyoung Kim and Clare Jim
SEOUL/TAIPEI |
Tue Aug 16, 2011 10:55am EDT
SEOUL/TAIPEI (Reuters) - Asian handset makers using Google Inc's Android operating system might turn to rival platforms such as Microsoft Corp's Windows after Google upended the mobile landscape with its $12.5 billion bid for Motorola Mobility Holdings.
Taiwan's HTC and Korea's Samsung Electronics have sold millions of mobile devices running on the free Android system, catapulting Google to the top slot in the booming global mobile software market.
But the acquisition of Motorola could turn Google from a partner to a competitor for more than 30 other Android-handset companies.
"The deal will make most Android players realize 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.
Wall Street quickly anointed Microsoft a winner in the deal, with Windows potentially benefiting if the acquisition alienates the other phone makers that rely on Android.
Android held a 43.4 percent share of the smartphone market at the end of the second quarter, ahead of Nokia's 22 percent, according to data from research firm Gartner. Apple ranked third with 18 percent, the data showed.
Nokia earlier this year opted for Microsoft's software, dropping its own software and shunning Android. Its first Windows Phone handsets are due out later this year.
Shares in Nokia, which had fallen around 45 percent since from the start of the year to last Friday due to worries about its declining market share, rose 5.5 percent on Tuesday, extending Monday's 9 percent jump.
Much of that was due to speculation Nokia could become the next buyout target, although analysts were mixed about the possibility of a bid emerging.
Some said the high offer for Motorola made Nokia look cheap by comparison.
But others said that while Nokia could benefit from the deal if it stirs confusion among Google's other handset partners, such a situation could compel a company like Microsoft to shun a buyout of any particular handset maker.
"Eventually, we think that conflicts of interest may force Google to choose between vertical integration and shutting down device production at Motorola Mobility," J.P. Morgan analyst Rod Hall said in a note to clients.
BETS ON MOTOROLA TURNAROUND
Shares in Motorola's Asia's suppliers jumped on the deal.
Foxconn International Holdings Ltd, the world's top contract cellphone maker which counts Motorola as a client, surged as up to 17 percent on prospects of more business.
Shares of Compal Communications Inc and Arima Communications were among a slew of Motorola suppliers that hit the 7-percent daily limit in Taiwan.
"Everybody is betting on a Motorola turnaround. Motorola will get more help from Google to push its Android handsets with the deal," said Yuanta Securities analyst Bonnie Chang in Taipei. "Outsourcing companies such as Foxconn International and Compal Communications will benefit directly the most."
Shares in Samsung, which has businesses from chips to TVs and energy as well as phones, ended 6.1 percent higher. Fellow Korean phone maker LG Electronics edged up 0.3 percent.
HTC closed up 3.1 percent in a Taiwan market down 0.3 percent.
ANDROID UMBRELLA
Some brokers said the Motorola deal could be Google's way to provide support to Android players.
Phone makers and software firms are involved in copy-cat lawsuits in the fierce battle over who owns patents used in mobile devices, with Apple going after Android device makers.
"We suspect that Google will now try to provide an umbrella for the Android community that provides IP protection from key rivals such as Apple and Microsoft. This is broadly how Microsoft protects Windows Phone," Nomura said in a note.
"We do not believe that Google will aim to continue to make handsets long term, but will rather look to spin the business out to an Android partner -- such as Huawei, LG, ZTE, for example."
Globally, HTC has been a standout winner after being the first to roll out an Android-backed smartphone, leaving it most exposed to any shift in the landscape, analysts said.
Nearly all of its smartphones run on Android but it also has a long-standing partnership with Microsoft.
"HTC and Samsung are companies Google can trust but not control to drive market share," Chang said. "If in the long run Google decides HTC and Samsung have very different business roadmaps, it may want to leverage on Motorola to gain market share."
HTC said in May it plans to bring out phones based on Microsoft's new Mango Windows phone software. However on Tuesday, HTC said the Google-Motorola deal would not affect its partnership with Google.
"This is a positive development to the Android ecosystem, which we believe is beneficial to HTC's promotion of Android phones," HTC said in a statement.
(Additional reporting by Faith Hung in Taipei and Lee Chyen Yee in Hong Kong; Writing by Anshuman Daga; Editing by Lincoln Feast and David Cowell)
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Comments (1)
Majick1 wrote:
Yes and the sun could super-nova and screw up the whole cell phone business. What is up with all these Gloom N Doom “experts”, no matter what anyone does they see a total collapse of something – get a life!
Aug 16, 2011 9:20am EDT -- Report as abuse
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