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Bad News for Google: Nervous Motorola Hedges Android Bets [Update]

Motorola Mobility (MMI) is reportedly developing a Web-based mobile operating system to wean itself from dependence on Google (GOOG) Android. Although it is also a likely negotiation tactic for dealing with Microsoft (MSFT), the move says a lot about the current state of smartphones -- and Google's increasingly endangered position in the industry as a result of its IP strategy -- or, rather, it's lack of one.

Google has become the target of numerous legal attacks by competitors, many of which affect it only indirectly. Instead, Google's rivals are frequently suing its hardware partners. The count currently includes Motorola, HTC, and Barnes & Noble (BKS).

With both Microsoft and Apple (AAPL) suing it, Motorola must face the real possibility that no matter how attractive Android may seem, it could be a business dead end. So the company needs a potential replacement platform. Currently there are multiple operating systems in the mobile world, including:

  • Apple (AAPL) iOS
  • Google Android
  • Microsoft Windows Phone
  • HP (HPQ) webOS (Palm's former OS)
  • Nokia (NOK) MeeGo and Symbian
  • Linux
This has effectively come down to iOS and Android. MeeGo will be lucky to ship on one actual device from Nokia, which plans to transition to Windows Phone. The fortunes of Symbian, historically popular, have waned as a result. That will make Microsoft a potential contender, given the number of phones Nokia ships.

Apple iOS is out as a fallback, because Apple doesn't license its OS. Microsoft's attractiveness as a partner, meanwhile, has probably waned thanks to the fact that it's currently suing Motorola. (Having an alternative could be a negotiation ploy, as Microsoft does need some success with Windows Phone, and it will be a while before Nokia has units that run the software in the market.) HP has its own hardware interests, and Motorola wouldn't want to underwrite directly the work of a competitor.

That leaves rolling its own. Phone hardware vendors don't generally write their own operating systems. The work is time-consuming and expensive compared to using a commercially-available platform. But it could still be the best strategic choice -- not good, just better than other options.

In the past, Motorola used Linux, and so has the experience working directly with a versatile operating system. The company could put a web interface atop a Linux kernel, just as Google is doing with Chrome OS. According to reports, Motorola has hired mobile and Web engineers from Apple and Adobe (ADBE). That speaks of a serious effort.

If so, this is the first sign of big problems for Google. Smaller companies don't have the resources to stave off lawsuits from the likes of Microsoft and Apple, which have huge financial war chests, and Google doesn't indemnify its hardware partners. Google's do-first-apologize-later pattern of behavior could disrupt its mobile aspirations.

[Update: Motorola has issued a contorted denial that sounds like an admission.]

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