Google getting rid of Motorola’s set-top box biz to focus on phones and Apple

It is no secret that no one has cracked the code to the perfect TV yet. As multiple vendors fight for the living room with no clear leader in sight, the search monster’s Google TV platform is floundering and Apple’s $99 Apple TV hockey puck is still deemed a hobby business, despite sales in the first six months of 2012 doubling to 2.7 million units, almost equalling the 2.8 million Apple TVs moved in the entire 2011.

And as the prospect of an Apple-branded standalone HD TV set continues to occupy the brightest minds in the industry and Hollywood, rival Google is looking to sell off the cable box division of Motorola and has already received a few offers last week. But why is Google willing to drop Motorola’s set-top box business in the first place?

If you ask Bloomberg, Google wants “to focus on high-end smartphones as it steps up competition with Apple”.

According to a person familiar with the situation:

Google, which has been trying to sell the unit, received multiple offers on Dec. 7, said the person, who asked not to be identified because the process is private.

A deal has a 50-50 chance to be announced by year-end or postponed because of a complicated financing structure in which Google might retain some equity and the unit’s patents, the person said.

Motorola is entangled in a patent-infringement suit with TiVo, which could complicate the sale. Apple CEO Tim Cook in last week’s interview with NBC said that the living room remains an area of “intense interest” for his company.

When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years. It’s an area of intense interest. I can’t say more than that.

On a somewhat related note, Reuters reported this morning that Japanese giant’s Panasonic, Sony and Sharp are selling off $3 billion worth of assets amid the slump of the TV set making business.

Google has yet to produce flagship handsets built in full co-operation with the Motorola Mobility unit. For example, the Nexus 4 is built by LG, the seven-inch Nexus tablet is the work of Asus, while a ten-inch version is being manufactured by Samsung.

Google in August announced it would axe 4,000 Motorola employees and close about a third of its 90 facilities in an effort to turn the ailing handset maker into a profitable business. The unit refreshed the Razr lineup in September.

Here’s the new Razr commercial featuring Google Now, from two days ago.

Of course, this doesn’t mean Google is giving up on the Google TV project, which is basically a software offering as third-party vendors get to build Google TV-branded integrated television sets and set-top boxes.

Motorola had a successful set-top box business of its own prior to the Google acquisition. It goes without saying that post-acquisition the unit is more a distraction than a viable opportunity because the search giant really cannot expect to sell cable-television providers on its ad-driven model.

At any rate, unloading a business it has no long-term interest playing in seems like a prudent move, one indicating Larry Page’s determination to turn the search company into a vertically integrated handset maker akin to Apple.

Your take on the situation?