Motorola Buyout Could Start Binge of Research and Development Spending

 
 
By Don Reisinger  |  Posted 2011-08-16 Print this article Print
 
 
 
 
 
 
 



5. More consolidation will occur

One of the most likely effects of Google's acquisition is further consolidation in the mobile space. Handset vendors might decide to merge to take on Google and Apple, while major firms, such as Microsoft, could gobble up other brands. Consolidation could prove troublesome for Apple. Right now, it's faced with a host of small companies with limited cash to invest in new technologies. If many firms join forces to change the direction of the mobile space, Apple could have more trouble getting its message to its desired market.

6. Apple will need to try harder

Right now, Apple is able to coast. The company's iPhone 4, which has been out more than a year, is still one of the most advanced products on the market, which means it might not even need to deliver a new iPhone anytime soon. But once Motorola Mobility is taking advantage of Google's cash and scale, Apple will have to try harder to stay a step ahead. As Motorola develops more advanced products in the future the onus will be on Apple to keep up. That can only mean more capital expenditure and investment in research and development-two things that Apple likely doesn't want to see go up in the coming years.

7. Will margins be affected?

Aside from features, it's important to keep in mind that Google's Motorola Mobility acquisition could have a negative impact on Apple's margins. After all, if Google decides to beat the iPhone on price with products that have similar features, Apple will need to respond with better pricing, as well. In the process, the company could lose some of the profitability it currently enjoys.

8. Steve Jobs' wrath

When Apple CEO Steve Jobs found out that Google was breaking into the mobile space, he was extremely displeased. Over time, the companies' once friendly relationship has gone awry as Jobs continues to take issue with Google's strategy. Now that the search giant has bought Motorola Mobility, how might he react? Chances are it won't be too kindly. Expect Steve Jobs to privately and whenever possible publicly express his displeasure with Google's move.

9. It means an iPad competitor is coming

The Motorola Xoom is by no means a competitor to the iPad 2. The device, which launched earlier this year, had a poor operating system in Android 3.0 and a price point that hindered it from gaining traction in the marketplace. Google is also having trouble getting its Android platform to catch on with tablet customers. But with the partnership between the companies now only months away from being completed, all that could change. Google could invest heavily in a Motorola tablet, and with the help of Android, finally deliver something worthwhile. Apple, while enjoying iPad 2 sales over that period, better be ready.

10. Patents

One of Google's biggest problems has been its patent portfolio. The company itself has been sued by Oracle over alleged patent-infringement in the Android operating system, while its vendor partners have also been targeted. One of the companies targeting Android is Apple. But now that Google will have Motorola Mobility's patent portfolio on its side, all this might change. It's possible the "bogus" patent suits, as Google's chief legal counsel, David Drummond, calls them, might come to an end.

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Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 
 

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