Google-Motorola Deal: Impact on Apple, HP

Google Inc. shocked the technology world with its $12.5 billion all-cash deal to buy Motorola Mobility Holdings Inc, valuing each essential patent at about $20 million, to defend its Android ecosystem.

Rising IP threats to Android from Microsoft Corp. and Apple Inc. were considered as the primary drivers of the acquisition.

"Google gets Motorola Mobility's portfolio (17,000 patents), and while this deal may not necessarily mitigate some of the intellectual property (IP) wars under way (e.g. Apple and Motorola already suing each other), it may position Google to defend itself against more fundamental IP attacks, and increase counter-threat and leverage in global patent negotiations and litigation," said Mike Abramsky, an analyst at RBC Capital Markets.

Impact on Apple:

From Apple's perspective, the basis for its case against Android / Motorola has not changed. However, analysts predict a small positive for the Cupertino, California-based Apple as the deal may disrupt the Android family.

"We think such a deal is a small positive for Apple. Google will increase its patent portfolio and become a more formidable handset player as a consequence," BMO Capital Markets analyst Keith Bachman wrote in a note to clients.

Whereas Google has greater financial means to attempt to enforce patents than Motorola Mobility, the net patents faced by Apple, however, are not changing, but rather transferring from one party to another, Bachman said.

Moreover, the analyst said this deal could cause disruption within the Android OEM family. For example, from the perspective of Samsung, the analyst had a hard time understanding how this deal is positive.

Hence, some of the Android participants might be interested in dedicating incremental resources to another platform, such as Windows.

"Any disruption to the Android family, we view as a small positive for Apple," Bachman added.

Impact on HP

The Google-Motorola deal may be the boost that HP's WebOS needs as the deal may open the doors for Google partners like Samsung and HTC to look for other mobile operating systems.

Hewlett-Packard, or HP, fits the bill perfectly as it possesses the technical, manufacturing, and marketing muscle to compete in this market. Any shake-up in the current trajectory of Android is a positive for HP.

Analysts also believe that this is a great opportunity for HP's webOS to capitalize on the uncertainty this creates in the Android ecosystem and snag an amazing partner for webOS.

Meanwhile, Bachman continues to believe that it is unlikely that Hewlett Packard will spin off its PC division in the near or medium term.

'However, if we are wrong, Google's acquisition could make Samsung more interested in HP's PC division, in Palm in particular," Bachman noted.