Should Google Selling Motorola Concern Microsoft?http://www.fool.com/investing/general/2014/01/30/what-microsoft-should-learn-from-google-deal.aspx Tim Brugger
January 30, 2014
If you follow Google (NASDAQ: GOOG), you've likely heard about the $2.9 billion sale of its Motorola unit to China-based Lenovo. What was interesting, though not surprising, was that Microsoft (NASDAQ: MSFT) was almost instantly linked to the Google-Lenovo deal. With its pending foray into devices and services via the Nokia (NYSE: NOK) acquisition nearing completion, some pundits cite the Motorola deal as a warning for Microsoft.
According to some, the problem the Google-Motorola deal demonstrates is that Microsoft must choose between hardware and software. As Google learned the hard way, tech companies can't be both a hardware and a software provider, so say the pundits. While not completely without merit, the argument loses a bit of its luster when you consider the particulars of both the Google-Motorola and pending Microsoft-Nokia deals.
Microsoft and Google also decided to test the mobile manufacturing waters by going big via acquisitions. The $7.4 billion, based on current exchange rates, that Microsoft is spending on Nokia's devices and services unit pales in comparison to the $12.4 billion price tag Google put on Motorola, but both certainly qualify as big-time investments.
... but different
When Google agreed to buy Motorola in Aug. of 2012, outside its brand recognition, Motorola had become a non-entity in the mobile phone market. You may recall that 2012 was the year Samsung took over the top mobile phone sales spot from Nokia for the first time, selling 384.6 million units compared to Nokia's 333.9 million devices. During the same year, Motorola sales had dropped to a meager 33.9 million, from just over 40 million in 2011. When Google took the reins, Motorola wasn't just experiencing a downward trend, it was dying.
Granted, Nokia is hardly on a tear itself, as more and more users shift to smartphones in lieu of inexpensive feature phones, its bread and butter in