Google (Mountain View, Calif.) said it would pay $40 per share for Motorola Mobility, a premium of 63 percent over the handset makers Aug. 12 closing price of $24.47. Motorola Mobility's stock surged up 56 percent in early afternoon trading Monday on the news.
Google said the acquisition of Motorola Mobility, a member of the Android Open Handset Alliance, would enable Google to "supercharge" the Android ecosystem and enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open, Google said. Google will run Motorola Mobility as a separate business, Google said.
"Motorola Mobility’s total commitment to Android has created a natural fit for our two companies," said Larry Page, Google co-founder and CEO, in a statement. "Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers."
In a blog posting, Page said the acquisition would strengthen Google's patent portfolio, enabling the firm to better protect Android from "anti-competitive threats from Microsoft, Apple and other companies." Page noted that Microsoft and Apple last month led a consortium of companies that banded together to buy a load of patents from Nortel Networks Corp. for $4.5 billion. Google claims this acquisition is part of anti-competitive behavior meant to squash the growth of the Android operating system, which is now the leading smartphone OS, found in 48 percent of smartphones in the second quarter, according to market research firm Canalys Ltd.
Google initially bit $900 million for the Nortel patents. Some analysts have said Google is in desperate need of patents. There are reportedly more than 45 patent infringement lawsuits against Android and makers of Android devices.
Motorola Mobility currently holds 24,500 approved and pending patents around the world. These include 14,600 approved and 6,700 pending patents held by its Mobile Devices unit covering key industry wireless standards including 4G and near-field communications. Together, this treasure trove could aid Google in defending itself in ongoing intellectual property fights with rival mobile device developers.
"From an intellectual property standpoint, the acquisition bolsters Google’s negotiating position with Apple, in the event that Apple goes after Android-based products the same way it did with Samsung in Europe," said Francis Sideco, principal analyst for wireless communications at market research firm HIS iSuppli. “If nothing else, Google will be able to assert Motorola’s IP for the 3GPP and 3GPP2 cellphone specifications, which are used in both the iPhone and iPad."
Apple has filed patent infringement lawsuits against Samsung, claiming that Samsung's Galaxy media tablets and smartphones copy the design of Apple products. Last week, a European Union judge granted an Apple request to temporarily halt the sale of Samsung's Galaxy Tab 10.1 in most of Europe.
If Goolge/Motorola Mobile compete with LG/Samsung/Sony and others in handset market, why these vendors go for Android? They may like to switch over to Windows or may be other. Anodroid may be called open but now other vendor will have mistrust.
Why would the Google+Motorola partnership be a problem for Phone Makers like Samsung or LG? They've been getting Android from Google for Free. So I don't see why they will quit on Android for Microsoft, knowing that the latter won't offer the OS for free. With RIM's market share on a free fall, they could possibly be targeted by Apple. But I don't think Apple has any interests in acquiring RIM.
I do not think Apple has an interest in RIM either. Wrt Android phones, however, you are assuming things will remain as they are which I doubt will be the case. If Google are becoming a mobile phone provider, they would have an unfair competitive advantage over other Android phones' providers, which will make the latter think hard about their commitment to Android as a SW platform of choice. I do not think Google will continue to supply their competitors with the same quality of software they are using in their phones anyway. The whole thing is akin to Microsoft's unfair competitive advantage in Windows applications (Office, VS, Explorer etc.) given they make the Windows OS. What would the regulators do? I think this acquisition would be a step backwards for the community...
Was this deal thought of and done overnight? I don't think so. Google and its advisers certainly considered the pros and cons of such a deal, and the prospect of buying Motorola has perhaps been on Larry Page's mind for quite some time. Now Google can use Moto's patent portfolio to play a better defense, but also an excellent offense. Handset makers like Samsung, HTC and LG will redirect their focus towards Microsoft if the latter can provide an OS better than Android. And until I see it, I don't think Microsoft can come up with something that will give Android a run for its money.
Isn't it sad that $12.5B is spend not for sake of innovation or new business opportunity, but just to defend against swarms of IP lawyers?
What is ratio of spendings on engineering vs lawyers in todays world? I guess it is diving and it is not customers who will benefit.
Google says Android will remain open, but one must wonder how effective that openness will be when Google is able to provide the latest "pure" form of Android on its own hardware platform before releasing it to other Android partners. Google could very well make Android a closed ecosystem, just like Apple has with iOS, if it chose to do so.
Another interesting aspect of this deal is that Google will also be acquiring Motorola's broadband and cable TV equipment businesses, which represent nearly 2/3 of the cable TV/broadband infrastructure and cable set-top box market in the U.S.
This could have major implications for Google TV.
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