Shares of HTC Corp (宏達電), the world’s No. 5 smartphone maker, closed unchanged yesterday amid investor concerns that Google Inc’s acquisition of US handset maker Motorola Mobility could undermine its partnerships with Android handset makers, such as HTC, thus jeopardizing HTC’s market position in the long run.
Analysts also said the likelihood of Google helping to boost HTC’s patent strength in its lawsuits with Apple Inc looked slim in the near term.
The Google-Motorola deal, however, sent the stock prices of Motorola’s local handset suppliers, Compal Communications Inc (華寶) and Arima Communications Corp (華冠), soaring by the daily 7 percent limit to NT$32.15 and NT$19.75 respectively, as the deal is expected to boost Motorola’s Android smartphone portfolio.
“Everybody is betting on a Motorola turnaround. Motorola will get more help from Google to push its Android handsets with the deal,” Yuanta Securities Co (元大證券) analyst Bonnie Chang (張文慧) said.
HTC yesterday said the Google-Motorola deal would not affect its partnership with Google.
The HTC’s stock price closed at NT$827, retreating from a 2.9 percent gain in early trading yesterday. The benchmark TAIEX fell 0.27 percent.
“This is a positive development for the Android ecosystem, which we believe will benefit HTC’s promotion of Android phones,” HTC said in a statement. “The partnership between HTC and Google remains strong and will not be affected by this acquisition.”
However, the acquisition of Motorola could turn Google from a partner to a competitor with the more than 30 Android-operated handset companies, analysts said.
“We believe that the potential increase of Motorola Mobility’s competitiveness may also bring more pressure to other Android phone makers,” Citigroup analyst Kevin Chang (張凱偉) said yesterday in a report.
With a 14 percent market share, HTC is the biggest Android handset maker in the US, where the Android system has outpaced rival operating systems such as Microsoft Corp’s Windows Mobile, according to market searcher Nielsen’s tally. Motorola came next with an 11 percent share.
Morgan Stanley shared Citigroup’s concerns.
“We are concerned whether HTC can maintain its lead [position in the] long-term,” Morgan Stanley said in a report.
“Although Google plans to run Motorola Mobility as a separate business, it may be tempted to favor it when launching new versions of the Android operating system,” Morgan Stanley said.
That could lead to a change in the landscape of the global mobile operating system market. Android held a 43.4 percent share of the smartphone market at the end of the second quarter this year, ahead of Nokia Corp’s 22 percent and Apple’s 18 percent, according to statistics from market researcher Gartner Inc.
Macquarie said existing “Android makers may begin to consider shifting some resources to Windows 7 devices,” while IDC analyst Francisco Jeronimo said the deal was a wake-up call for most Android players, prompting them to “realize how dependent they are on Google and how quickly Google’s plans can change their businesses.”
On Monday, Google CEO Larry Page told investors during a conference call that this would not happen, saying Motorola would be run as a separate company that licenses Android software, just as firms such as HTC and LG Electronics Inc do.
In fact, the acquisition of Motorola Mobility would better protect the Android ecosystem, Google told its top five partners that, as the deal included 17,000 granted patents.
However, UBS said it expected the deal would do little help to HTC’s current legal battle with Apple.
“HTC may still have to resolve the legal issues that are unrelated to the Android operating system,” UBS said.
The US International Trade Commission ruled on July 15 that HTC had infringed on two of Apple’s patents. They were not directly linked to the Android operating system, as the commission ruled against all of Apple’s claims against Android.
HTC shipped 11.02 million units of smartphones last quarter, almost double its shipments of 5.91 million for the same period last year, according to Gartner. Its global market share also expanded to 2.6 percent from 1.6 percent.
Additional reporting by Reuters
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