August 15, 2011 – NEW YORK (Reuters) - Research in Motion, Nokia and the cable television business are emerging as potential winners after Google said it would buy Motorola Mobility for $12.5 billion on Monday.
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If other handset manufacturers shy away from Google's Android system, Nokia and RIM could stand to benefit.
Pay TV companies could also be boosted if Google, which would own Motorola's set-top box business, backs down on disrupting the cable industry.
Meanwhile, the deal is unlikely to have an impact on Apple Inc's quest for the hearts and minds of smartphone customers, analysts said. Now that Google is a direct competitor, Apple may drop some Google products in its devices.
Views are mixed on the impact on Microsoft Corp, which has been touting its Windows software as an alternative to Android and Apple's operating systems.
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Android handset makers may be more willing to take a gamble on the unpopular Windows phone as an alternative, but customers show few signs of interest in Microsoft's belated attempts to find a foothold in the smartphone market.
But the deal brings Microsoft directly into legal conflict with Google over Android patents, which may hamper its attempts to collect royalty payments from Android handset makers. Microsoft and Motorola are already involved in a number of claims on each others' technology. Google's move to throw its weight behind Motorola will make for a tougher court battle for Microsoft.
The software giant might also be pressured into finding deals of its own to help spread its Windows phone software, said Al Hilwa, program director at IDC.
"It might send Microsoft into acquisition mode potentially looking at players like HTC," Hilwa said.
Nokia shares rose 9 percent on Monday as Google's offer for Motorola rekindled speculation of a bid for the Finnish mobile phone company. Nokia did not comment on the buyout rumors.
Nokia decided earlier this year to go with Microsoft's Windows operating system instead of its MeeGo software, which is being phased out. Nokia is pinning its turnaround hopes on new Windows-based phones due later this year.
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Its shares have sunk almost 60 percent this year as the Canadian company missed its own earnings forecasts, delayed a line of phones and failed to excite with its PlayBook tablet.
Next year, RIM plans to move its BlackBerry smartphones onto the same QNX-based platform that runs the PlayBook.
An ever-tighter integration between Google's Android software and Motorola's hardware "may put additional pressure on the success of RIM's pending QNX Super phones strategy," RBC Capital Markets analyst Mike Abramsky wrote.
RIM's stock rose 3.7 percent after the Google-Motorola news, but its shares still trade at less than five times the average earnings expectation for the year to next February.
Analysts said the deal does little to change the mobile landscape for Apple, given that Google has tried to enter the handset business through the launch of Nexus, which was co-manufactured by the Taiwan-based HTC Corp. Consumers received the Nexus coolly, which did little to challenge Apple's iPhone.
"Obviously Motorola knows a lot more about handsets than Google," said Gleacher & Co analyst Brian Marshall. "So I don't see really what Google brings to the equation."
The most obvious impact will be on the multiple patent infringement lawsuits that Apple has against Android handset makers around the world. But that too is unclear. Also, Apple was already suing Motorola Mobility for patent infringement.
One immediate response from Apple could be that it may drop some Google products, such as Maps or Search, from future versions of its iPhone and iPad.
Google has long been seen as a threat to the traditional pay TV industry, first with YouTube and then with Google TV box. Neither have quite had the negative impact on the cable business that some had predicted.
With this deal, Google is set to become one of the pay-TV industry's largest suppliers. Even if physical set-top boxes go the way of the Walkman, Motorola's encryption and conditional access software will continue to be important.
Bernstein Research analyst Craig Moffett wondered if owning a key supplier to the cable industry will temper Google's enthusiasm for frightening those companies.
"I think the cable industry would be delighted to see Google inside the tent, so to speak, of the traditional Pay TV model," said Moffett.
(Reporting by Bill Rigby in Seattle, Alastair Sharp in Toronto, Poornima Gupta in San Francisco, Nicola Leske in Frankurt and Yinka Adegoke and Liana Baker in New York; editing by Robert MacMillan and Matthew Lewis)