Google could sell Motorola handsets to Huawei

Google may be coming to its senses and planning to sell Motorola Mobility's hardware business, once it completes its purchase of the firm, according to some sources. Indeed, Huawei is emerging as the rumor mill's favorite candidate to take a difficult business off the search giant's hands, leaving it with the patents it coveted, and with its software profit model untainted.

When Google announced its plan to buy Motorola Mobility last year, it was widely assumed that it would offload the device activities as quickly as possible. It had originally sought to acquire only Motorola's hefty store of IPR, but this was apparently blocked by canny CEO Sanjay Jha, who knew the firm's value without its patents would plummet, and that it faced an uphill struggle to sustain market share in the cut-throat Android phone business. However, as the transaction as moved slowly through the regulatory process (just China remains to green light it), it was increasingly clear that Google was considering hanging onto the whole of its new unit, and entering the hardware business, presumably to offer an integrated device/software platform to challenge Apple's.

But the difficulties are obvious - the alienation of other Android partners, some of which, like Samsung, contribute far more to the operating system's success than Motorola does; the change to Google's profit structure, which is currently based around software and web services, taking on the overheads and risks of a consumer device firm which is on the decline in market share; and Google's poor track record in using its huge brand to push hardware, as seen in the various Nexus outings.

Last week, The Wall Street Journal analyzed the internal divisions which it believes are afflicting Google as it discusses the future of Motorola Mobility. That implied that Google may still offload the hardware, and the WSJ also reports that Huawei is in the running. As the newspaper's commentator Dennis Berman wrote: "But what of the 20,500 Motorola employees working in 92 major facilities across 97 countries, from Horsham, Pa, to Jaguariuna, Brazil? What of the factories churning out low margin cellphones and cable-TV boxes? What of the five years of losses, some $5.3bn in all?"

We can only imagine the American horror at one of its oldest and most iconic brands falling into Chinese hands, but it would be a useful purchase for Huawei, which aims to generate significant growth in its Android smartphone business over the next few years, aiming for a top three position by mid-decade. The Motorola products and brand would immediately accelerate its current process of moving away from white label featurephones and launching high end devices, and could also boost its efforts to get spots with US carriers (its main partner is currently MetroPCS).

However, some analysts think Google should hang on to most of its acquisition, especially tablet expertise. Carl Howe, VP of consumer research at Yankee Group, wrote on a blog post:

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