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Wall Street doesn't expect Google-Motorola deal to affect Apple

post #1 of 34
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While the move may be good for the parties directly involved, Google's purchase of Motorola is not expected to have a major effect on Apple, Wall Street analysts have said.

Analysts took the opportunity to weigh in on Google's announcement this week that it would buy smartphone maker Motorola for $12.5 billion. And for the most part, Wall Street watchers don't expect the deal, which comes with some 17,000 patents owned by Motorola, to have a significant impact on Apple or its iPhone.

Piper Jaffray

Analyst Gene Munster sees Apple's iOS and Google's Android as both winners in the rapidly growing smartphone market. He expects Apple will sell about 36 million iOS devices in the current September quarter.

"While Android adoption is outpacing iOS, both platforms are share gainers," he wrote in a note to investors. "This confirms our belief that unlike desktops, there will be two or three winners in mobile (iOS and Android and possibly Microsoft)."

Looking longer term, he expects market share losers will be BlackBerry, Symbian and Palm's webOS. He believes Apple will slowly lower the price of the iPhone to compete better in emerging markets, like India, Latin America and Asia, where Android is gaining share much faster than iOS.

Munster expects the new alignment between Motorola and Google will also help the struggling Google TV platform, as Google will be able to leverage Motorola's assets in the set-top box market. He has also been a longterm believer that Apple will launch a full-fledged high-definition television set in the next few years.



Morgan Stanley

Analyst Katy Huberty still expects iPhone shipments and market share to accelerate in the face of the Google-Motorola deal. She said the $12.5 billion purchase should be viewed by investors as neutral to Apple.

"On the one hand, the acquisition highlights the risk that Apple's IP portfolio presents to the Android ecosystem and the competitive strength of Apple's vertically integrated products," she wrote. "On the other hand, MMI's 17,000 patents and Google's $27 billion cash after the deal raise legal risks for Apple."

But in the near-term, she believes that any disruption in the Android ecosystem that may stem from an alignment between Google and Motorola could help Apple and sales of its iPhone.



Deutsche Bank

Chris Whitmore said he remains "confident" in Apple's position following the Google-Motorola deal. He noted that Google paid a 60 percent premium in buying Motorola, suggesting that the search giant is threatened in its current position.

He also believes the deal will create confusion within the Android developer community, and could alienate other Android device makers like HTC and Samsung.

Whitmore highlighted Apple's recent legal success against Samsung and HTC in patent disputes as evidence that third-party protection from Motorola may not help as much as Google hopes. In his eyes, the basis for Apple's case against Android and Motorola has not changed.

In addition to a patent grab, Whitmore also sees the deal as an opportunity for Google to attempt to replicate Apple's approach with iOS, marrying hardware and software development together to create a more cohesive and user-friendly experience.

"Google surely recognizes the poorly marketed cadence of its OS releases and growing product, pricing and branding confusion among consumers and developers," he wrote. "While this acquisition may have been made under the guise of IP enhancement, its roots may lie in Android's forking, inconsistent user experience and poor momentum in tablets."



RBC Capital Markets

Analyst Mike Abramsky doesn't believe that Google's acquisition will necessarily mitigate some of the intellectual property battles that are currently underway in the industry. For example, he said most of Motorola's patents are fundamental wireless inventions, while Apple's patents are related to multi-touch and user interface, and Research in Motion's patents are focused on mobile data synchronization.

But the deal does pave the way for what Abramsky called a "Nexus on steroids," referring to the "Nexus" brand Google uses to introduce its own hardware created in partnership with third-party manufacturers. He expects that the "Motoblur" skin that Motorola puts atop Android will also disappear after this deal. "And no one will miss it, in our view," he said.

The Motorola-Google alliance may affect other Android manufacturers like Samsung, HTC and LG, and it could also put additional pressure on RIM and Microsoft, who are vying to become the third-largest platform. However, Abramsky does not see the deal changing the competitive landscape for Apple.

In fact, in the near term, he sees Apple having some interim competitive advantages as Google's purchase potentially disrupts the Android landscape. Apple will be positioned to capitalize on any struggles with the launch of both the iPhone 5 and iOS 5 this fall.

However, longer term, he said the Google-Motorola deal could reduce Android fragmentation and improve software-hardware integration. That could make Motorola a better competitor to Apple at the high end of the smartphone market.
post #2 of 34
Damn!! Now I know Apple is screwed!!
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post #3 of 34
Don't forget that Page, and Brin are huge Steve Jobs fans. They offered him a position to lead Google as CEO before going to Schmidt.

Now that Page has taken the reins over from Schmidt (Sun guy, deep into the Open ideology), I wouldn't be surprised if Google tries to model itself more after Apple than Sun.

I wouldn't be surprised if a few years from now Google kills its Android licensing scheme (well, makes it prohibitively expensive) in favor of releasing Nexus phones, like Apple does iPhones.

The next few years in Google will be very interesting.
post #4 of 34
Quote:
Originally Posted by addicted44 View Post

Don't forget that Page, and Brin are huge Steve Jobs fans. They offered him a position to lead Google as CEO before going to Schmidt.

Now that Page has taken the reins over from Schmidt (Sun guy, deep into the Open ideology), I wouldn't be surprised if Google tries to model itself more after Apple than Sun.

I wouldn't be surprised if a few years from now Google kills its Android licensing scheme (well, makes it prohibitively expensive) in favor of releasing Nexus phones, like Apple does iPhones.

The next few years in Google will be very interesting.

Yes, I just cannot see the Moto deal being about patents only, not for $12.5B. \
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Where are we on the curve? We'll know once it goes asymptotic!
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post #5 of 34
I don't see any reason for Apple (or MS for that matter) to feel threatened by the Moto purchase. I see little to no impact since Apple generally plays to a different consumer model anyway.

The only change of consequence for Apple might be from a legal perspective if at all. Where Apple/Microsoft have been trying to outmaneuver Google on the patent front, this will tend to level the playing field a bit, as well as bring IP auctions back down from the stratosphere. Just not as urgent a need for more ammunition with all the big players capable of injuring the others once/if this deal passes muster. But in any case it doesn't take an industry financial analyst to understand this really minimally affects Apple. No story here.
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post #6 of 34
Even though a number of articles I've read said that Motoblur kinda sucks, I wonder why Motorola continued to use it.

That's the problem with Moto, they don't seem to pay attention to what's going on around them and I guess that's why they continued to lose market share and money. I hope that Google forces Moto to use their own reference UI and get rid of Motoblur. I still don't expect for Moto to do any better because that company is ready to go under no matter what unless Google can get rid of all the older executive management and get some fresh blood. Ever since Moto split into two divisions, MMI has been losing money for shareholders and that's even with using free Android. What pathetic way to run a company.
post #7 of 34
Quote:
Originally Posted by IQatEdo View Post

Yes, I just cannot see the Moto deal being about patents only, not for $12.5B. \

Well, the theory is (and its extremely plausible) is that Motorola refused to sell the patents by themselves. Essentially, Google was forced to buy the patents, and pay a premium for the rest of the company, because they were in a corner (esp. with the threat to sue other Android makers, and MS showing interest in buying Moto).
post #8 of 34
About all this deal does right now is give the Fandroids a good case of "morning wood". I'm in the camp of those who think this will wind up making HTC and Samsung look elsewhere for a mobile os.
post #9 of 34
Of course it won't. Because Google is no Apple - either in philosophy, priorities, or vision.
post #10 of 34
Quote:
Originally Posted by addicted44 View Post

Well, the theory is (and its extremely plausible) is that Motorola refused to sell the patents by themselves. Essentially, Google was forced to buy the patents, and pay a premium for the rest of the company, because they were in a corner (esp. with the threat to sue other Android makers, and MS showing interest in buying Moto).

THE KEY: before MS did $$$$$$$$
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post #11 of 34
What are they talking about? This will move the next thirty to one hundred percent rise in Apple stock price forward at least six months.
post #12 of 34
Not really of issue but I just noticed that AAPL's market cap is almost exactly double that of GOOG... it's only out by pennies.
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post #13 of 34
Quote:
Originally Posted by starwarrior View Post

What are they talking about? This will move the next thirty to one hundred percent rise in Apple stock price forward at least six months.

This will have no real impact on that though... Thayer was going to happen anyway.

Ultimately one of two things is going to happen in the smart phone arena-- all the big players cross-license their patents, and smaller players will have to pay them $$$. The banter until that is done doesn't really matter.

(And, MMI was $12.5B less ~6B cash, so not 'that' much more than Nortel.
post #14 of 34
Quote:
Originally Posted by aaarrrgggh View Post

This will have no real impact on that though... Thayer was going to happen anyway.

Ultimately one of two things is going to happen in the smart phone arena-- all the big players cross-license their patents, and smaller players will have to pay them $$$. The banter until that is done doesn't really matter.

(And, MMI was $12.5B less ~6B cash, so not 'that' much more than Nortel.

Where'd you get $6 billion in cash. It's closer to $3.2 billion.

Regardless... double that of the Nortel patents but still leaving Google with $30 billion in cash.
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post #15 of 34
I want my...

I want my...

I want my GoggleTV. Not!

I want my...

I want my...

I want my GoggleTV. Not!

Your money for nothing and your Nexus for Free!

(said really, really fast: "with the purchase of the same model. Does not include taxes. Not available in H! and AK. Terms and conditions apply.")

To the tune: I want my MTV.
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Ten years ago, we had Steve Jobs, Bob Hope and Johnny Cash.  Today we have no Jobs, no Hope and no Cash.

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Ten years ago, we had Steve Jobs, Bob Hope and Johnny Cash.  Today we have no Jobs, no Hope and no Cash.

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post #16 of 34
Wells Fargo just lowered its outlook on Google, stating that they feel the hardware acquisition may lower Google's margins. At the same time, they reaffirmed their strong rating on Apple.

So let's add them to the list of analysts that think this is a non-issue for Apple.
post #17 of 34
Motorola devices have been on Android's lab from day one and benefit the most in terms of software and hardware builds to approach a highly vertically integrated product. But to this day, the brand has fallen behind HTC and Samsung. So there is nothing new here and Apple will continue to hammer Motorola in a battle of vertically integrayed brands.

On a side note, IMO, the story that Motorola was seriously considering supporting WP7 (if they could get a deal the same as Nokia) may have prompted Google to act fast on the acquisition.
post #18 of 34
Quote:
Originally Posted by addicted44 View Post

Well, the theory is (and its extremely plausible) is that Motorola refused to sell the patents by themselves. Essentially, Google was forced to buy the patents, and pay a premium for the rest of the company, because they were in a corner (esp. with the threat to sue other Android makers, and MS showing interest in buying Moto).

Okay - got that thanks. Perhaps Google was that desperate.
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post #19 of 34
I think the idea that this is good for google TV is malarky. The main customer for Motorola set top boxes is cable companies, not end users. And cable companies most certainly do NOT like the idea of either Apple TV or Google TV. If MMI starts integrating googleTV functionality into their set top boxes, the cable companies will find a different supplier.

Motorola set top boxes don't suck because Motorola doesn't know how to make non-sucky set top boxes. They suck because that's what the cable companies want.
post #20 of 34
As a platform, Android is like a roman candle -- it shot up high in the sky, burned very brightly, but is now at risk of fading fast.

Android is besieged by serious IP issues, a lack of economies of scale and profitability among its OEMs (with Samsung being a partial exception), and somewhat lukewarm developer support (conditional on its nominal size).

Buying MMI is a "circle the wagons" move by Google. The MMI purchase does the following:

1. Protects other Android OEMs from litigation from MMI (but provides no protection against anyone else)
2. Gives Google control over hardware design
3. Gives Google hardware that is well defended patent-wise

This gives Google the chance to change business models. The bottom line measure of the success of any business endeavor is profits. In mobile Apple's business model is generating massive profits, Google's is not. The longer that continues the harder it would be for Google to compete. Page must have come to the conclusion that the "give the OS away for free" model just wasn't going to work and, to his credit, has the courage and humility to make a major change in course. Frankly, I suspect that course change will probably fail. But it's better than sticking with a sinking ship of a business model.
post #21 of 34
Quote:
Originally Posted by Blastdoor View Post

I think the idea that this is good for google TV is malarky. The main customer for Motorola set top boxes is cable companies, not end users. And cable companies most certainly do NOT like the idea of either Apple TV or Google TV. If MMI starts integrating googleTV functionality into their set top boxes, the cable companies will find a different supplier.

Motorola set top boxes don't suck because Motorola doesn't know how to make non-sucky set top boxes. They suck because that's what the cable companies want.

True...what people should be doing is buying Scientific Atlanta stock right now (I believe they are the other big set top box making company).

I can assure you there are frantic calls from Sci Atl salespeople going out to all the cable companies.
post #22 of 34
Quote:
Originally Posted by addicted44 View Post

True...what people should be doing is buying Scientific Atlanta stock right now (I believe they are the other big set top box making company).

I can assure you there are frantic calls from Sci Atl salespeople going out to all the cable companies.

What do set top boxes have to do with Motorola Mobility?

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post #23 of 34
The hedge fund mogul, Soros, just sold all his holdings in Google and purchased Motorola Solutions (the company that remains after the acquisition of Motorola Mobile).

I think this may just be the first of many hedge fund moves as a result of the Google deal.
post #24 of 34
Quote:
Originally Posted by mstone View Post

What do set top boxes have to do with Motorola Mobility?

Motorola Mobility includes the division that manufactures set top boxes.
post #25 of 34
Quote:
Originally Posted by mstone View Post

What do set top boxes have to do with Motorola Mobility?

It's a part of the Home division of Motorola Mobility and included in the anticipated deal with Google.
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post #26 of 34
Quote:
Originally Posted by Fretless View Post

The hedge fund mogul, Soros, just sold all his holdings in Google and purchased Motorola Solutions (the company that remains after the acquisition of Motorola Mobile).

I think this may just be the first of many hedge fund moves as a result of the Google deal.

Links are our friends. Here, I'll help:

http://www.bloomberg.com/news/2011-0...lls-fargo.html

(the headline doesn't mention google, but the google sale is mentioned further down the page -- and note the timing of the sale suggests this is not a reaction to the merger announcement)
post #27 of 34
Quote:
Originally Posted by addicted44 View Post

True...what people should be doing is buying Scientific Atlanta stock right now (I believe they are the other big set top box making company).

I can assure you there are frantic calls from Sci Atl salespeople going out to all the cable companies.

I think Scientific Atlanta is part of Cisco now.
post #28 of 34
And FWIW France Telecom calls the deal "great news for the (mobile) industry".

http://allthingsd.com/20110815/u-s-c...t-a-thumbs-up/
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post #29 of 34
Quote:
Originally Posted by starwarrior View Post

What are they talking about? This will move the next thirty to one hundred percent rise in Apple stock price forward at least six months.

Apple's stock is invincible. It will continue to rise forever. They have shown that they are impervious to recessions. There is no business cycle anymore - not when it comes to Apple. It is always a sure thing to buy Apple stock.
post #30 of 34
Quote:
Originally Posted by Blastdoor View Post

As a platform, Android is like a roman candle -- it shot up high in the sky, burned very brightly, but is now at risk of fading fast.


More like a balloon. It is getting totally over inflated and it will inevitably burst, let out all the hot air, and be worthless.
post #31 of 34
Quote:
Originally Posted by Gatorguy View Post

And FWIW France Telecom calls the deal "great news for the (mobile) industry".

http://allthingsd.com/20110815/u-s-c...t-a-thumbs-up/

Ironically, that link has FT calling it "great news" precisely because they expect Google/Moto to provide integrated devices like Apple.

Which would categorically NOT be "great news" for the rest of the Android HW makers.
post #32 of 34
Quote:
Originally Posted by AppleInsider View Post

[...] "Google surely recognizes the poorly marketed cadence of its OS releases and growing product, pricing and branding confusion among consumers and developers," he wrote. "While this acquisition may have been made under the guise of IP enhancement, its roots may lie in Android's forking, inconsistent user experience and poor momentum in tablets." [...]

Wow. Truer words were never spoken. The Android user experience is pretty forking inconsistent.

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post #33 of 34
I feel much better now, economists are never wrong, nor does the economy ever go down when they are left in charge

yay i finally got to use the devil smiley
post #34 of 34
No company with a working long term strategy would need to make an overvalued buy like this.

The patents are clearly not worth it (there's nothing new or earth-shaking about them, and Motorola has already got maximum value out of them).

So where's the value in Motorola's manufacturing arm? Hard to see - Motorola wasn't even making a profit, and there's nothing that can't be sourced better and cheaper elsewhere.

My conclusion is that Google is getting a bit desperate, not a sound basis for long term business decisions. Some analysts have been saying for a while that Google's business model doesn't have the legs to go long term, and it's beginning to look like they are right.

Sergey and Brin need to get a better quality crystal ball.
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