Google Inc.’s announcement this morning that it planned to acquire Motorola Mobility Holding Inc. for $12.5 billion is expected to have a significant impact on the mobile device space for no other reason than it will give Google a more direct channel for its blossoming Android ecosystem.
However, for domestic wireless carriers the impact could be more modest. Carriers in general have often been adverse to putting too many eggs into a single device maker’s basket as that tends to lessen their leverage in the pricing relationship. This is evident by the diverse selection of devices makers strewn across most major operators.
Motorola is currently a supplier of devices to all four major U.S. carriers to varying degrees, though beyond any sort of tie to its proprietary iDEN technology is not dominant at any one carrier.
At Verizon Wireless, Motorola supplies five Android-powered smartphones, a feature phone and the Xoom tablet that runs Android. At AT&T Mobility, Motorola provides just a pair of Android-powered smartphones and a single feature phone.
At Sprint Nextel Motorola provides a pair of CDMA-based Android smartphones as well as a CDMA-based smartphone running Microsoft Corp.’s Windows Mobile OS 6.5, which is the only non-Android smartphone Motorola currently offers in the United States. Motorola also provides Sprint Nextel with a pair of Android-powered smartphones compatible with the carrier’s iDEN network as well as five iDEN handsets. Sprint Nextel also offers its own version of the Xoom tablet.
At T-Mobile USA Inc., Motorola offers just a pair of Android-powered smartphones.
So it would seem that beyond the single Windows-powered device at Sprint Nextel, Motorola is already seen as an Android-centric company when it comes to smartphones in the Unites States.
In the end the deal between Motorola and Google could go in two directions, or both. Motorola could become more prominent as a direct-to-consumer offering for Google, which with its Nexus lineup has had very limited success circumventing the traditional carrier model.
This could provide further leverage for device makers that for years have been trying to break out from under the control of domestic carriers, which control the final link to customers through device subsidies. But, until device makers begin to take on that subsidy model, which with its deep pockets is something Google could attempt, this channel looks to remain negligible.
Motorola could also become more of a volume Android player with Google perhaps subsidizing a line of Motorola-branded devices so that they could sell at a lower price point and provide some competition for Chinese vendors entering the lower-end of the smartphone space. This could allow carriers to target non-contract customers with a device that can forgo the stigma of an unfamiliar brand name.
This could be a good move for regional players like MetroPCS Communications Inc. and Leap Wireless International Inc./Cricket, which have had to rely for the most part on Chinese-based vendors for their entry-level smartphones, leaving the more well-known brands to sell at more prohibitive price points.
The one negative for the Google/Motorola duo could be if carriers see the relationship as interfering with their ability to get the most advanced Android devices from other device makers. If this were to happen carriers could begin sniffing around for alternatives, though those could be limited.
Microsoft would appear to be an option, though Nokia Corp.’s decision to go heavy into the Microsoft OS could complicate those matters. Research In Motion Ltd. could provide another option, though the Canadian company still looks to be trying to figure out what it’s future product line up will look like. There is also Hewlett-Packard Co.’s Palm WebOS, which since being acquired has languished in a series of devices that carriers appear to be passing on.
However, if carriers begin to put pressure on device makers for Android alternatives, there could be a renewed push to provide a compelling range of devices running something beyond the current Android/iOS domination.
And finally there is Apple Inc. and its iPhone, which now more than ever could see increased pressure to expand its carrier reach. The device is currently limited to a single new model and a pair of carriers. With a new version expected to launch next month, there could be increased clamoring from those carriers currently left out of the loop for an iPhone of their own, or perhaps a broader array of iPhone models.
One thing is for sure. Carriers are not likely to give up their position as the dominate destination for customers looking to acquire smartphones without a fight, which in the end could be good news for consumers looking for more choice and lower prices.
