Motorola Inc. (MOT) has taken a strategic decision to enable the smooth sailing of its newly launched 3G smartphones in China. The company has entered into a global agreement with Microsoft Corp. (MSFT) to deploy the latter’s Bing services on its 3G smartphones. Users will enjoy a pre-loaded Bing bookmark on their mobile browser and an enhanced search widget with Bing integration. Search and Map capabilities through Microsoft will initially be available in China, starting in the first quarter 2010.
Motorola has decided to develop all its next-generation 3G smartphones based on Google Inc’s (GOOG) Android software. Android is quickly gaining significant market traction among 3G smartphone users throughout the world. Unfortunately, Google is in dispute with the Chinese Government over software censorship and has threatened to pull out of China if the Chinese Government fails to comply with its terms.
If Google eventually pulls out of China, it will deal a major blow to Motorola’s struggling mobile devices segment. Once a global leader in the mobile phone market, the company has been struggling for the last couple of years in offering any attractive device, after its iconic RAZR phone. As a result, its global market share has fallen to a mere 3.7% at the end of 2009 compared to a massive 28% in 2007.
However, in the fourth quarter of 2009, Motorola showed the first sign of revival of its mobile devices segment after launching Android based 3G smartphones. Motorola desperately needs to get a strong foothold in the Chinese market to realize a big turnaround. China has the largest number of mobile phone subscribers in the world and also started 3G network implementation.
Under this scenario, Motorola’s agreement with Microsoft makes sense. Having search alternatives on Android phones should lessen Motorola’s dependence on Google, in case the latter pulls out of China. Recently, Motorola also entered a deal with Baidu Inc. (BIDU) of China, which will allow all Chinese customers of Motorola handsets to use Baidu as the default Web search instead of Google on Android based phones.
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