Lenovo's move to buy Motorola Mobility from Google in a deal valued at $2.91 billion is likely to spur an Android ecosystem consolidation wave because smaller players aren't going to have the scale to compete.
The first casualty in this consolidation wave is likely to be HTC.
For Google, one advantage of selling Motorola to Lenovo for $2.91 billion is that it creates two big dogs in the Android ecosystem: Samsung and Lenovo. Lenovo has the scale to compete with Samsung eventually. Today, Lenovo is working on its supply chain efficiencies as it tackles emerging markets. If Google didn't create another Android giant it would rely too much on Samsung.
Without Lenovo, the Android ecosystem would be led by Samsung, which dominates and a bevy of smaller players like ZTE that can make some noise, but not enough to really diversify the hardware landscape.
HTC looked like it was going to be an Android player for a while, but its recent sales have been abysmal. HTC's One product portfolio has promise, but doesn't have the sales.
Assuming HTC isn't going to have a miracle turnaround, I only see the following options:
- Sell out to another rival, say Lenovo.
- Keep fighting a war that it'll ultimately lose, but go for one miracle design to save the day to put off the inevitable.
- Go back to its roots as a company that makes smartphones and designs for partners.
In any case, there isn't a clear path for HTC. A bulked up Lenovo in smartphones will pressure HTC, which is already squeezed by Samsung and a host of Chinese rivals with inexpensive handsets.
It's game over for HTC. It's just a matter of time.