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Rumor: Google May Sell Motorola Unit to Huawei

Unnamed sources from Asia are claiming that Google has already offered to sell Motorola Mobility to China-based Huawei Device at a high price. The news arrives as Google and Motorola wait patiently as China decides whether the $12.5 billion purchase will violate the 2008 Chinese Anti-Monopoly Law even though the acquisition has been given the green light by Europe, the United States and South Korea. That said, Google really can't sell anything until China gives the thumbs up too.

So why purchase Motorola only to sell off its hardware division thereafter? To gain its patents. There are 17,000 of them which could help protect Google's Android from a legal assault from the likes of Apple, Microsoft or some other patent trolls. This move would also help manufacturers defend themselves against the same patent sharks seeking to gain a wad of money while discrediting Google and those who follow it.

Yet having an in-house manufacturer would mean that Google could produce its own smartphones and tablets without having to out-source Google Experience Devices to other manufacturers. Recent reports suggested that such a plan is already in the works, that Google will release a new branded tablet once the initial smaller one produced by Asus hits store shelves later this year.

But there seems to be a great disturbance making waves through the Android community thanks to Motorola. Reports claim that many manufacturers don't want to bow down to Google's ways, and intend on releasing Android devices with a customized Android OS. They're uncertain about the Motorola acquisition and fear they will come second. The "forking" of Android -- as seen with Amazon's Kindle Fire -- could only cause even more fragmentation, thus pushing developers to solely work on iOS as it would be cheaper, easier.

While Google doesn't charge manufacturers to use Android, the search engine giant makes its money through advertising on the OS. What Google doesn't need is to make these manufacturers mad to the point of total Android anarchy. That said, this is why Google would consider selling off the hardware business to Huawei while retaining the patents: to still the restless yet loyal natives.

"Compared to what Google does, the smartphone business has horrible economics," says Bernstein analyst Pierre Ferragu. "The reason to buy Motorola was to strengthen patents. Now they have that, the logical thing is to sell the rest."

Google reportedly denies talks about selling the handset business when the Motorola acquisition is completed. Unnamed sources in Taiwan's handset industry are also refuting the rumor, saying that Motorola has a complete product lineup covering smartphones, tablets and set-top boxes. Even more, Motorola has long-term cooperation relationships with wireless carriers and cable TV operators -- relationships that are instrumental in getting Android into the office, the living room and even the kitchen.

Unnamed Taiwan sources also speculate that there's no need for Google worry about manufacturers abandoning Android just yet despite reports of several considering in-house operating systems. Android commands the majority of the mobile market and doesn't seem to be slowing down anytime soon, which in turn means a nice chunk of change for handset makers using the free open-source Android OS. Still, that won't stop these manufacturers from brewing up their own flavor of Android which could be bad for Android customers and developers alike.

As for pumping out its own hardware, Google using an in-house Motorola to produce a Google Experience Device should be no different than using an external Motorola to produce the same product as seen with the XOOM tablet. Google's hardware focus will likely zero-in on products like Google TV and the just-revealed Project Glass augmented reality specs while leaving Motorola alone to do its own thing.