For approximately $12.5 billion (or $40 per share), in cash, Google has announced to acquire Motorola Mobility. The price represents a premium of 63 percent to the closing price of Motorola Mobility shares last Friday.
Why Google Acquired Motorola Mobility?
The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.
Which did Google gain?
Google gains a portfolio of 17,000 patents and another 7,000 patents pending globally. Up until now, Google has taken the Windows approach to mobile—create an OS that all manufacturers can build on top of and just concentrate on the software—but that approach is not enough. More than 550,000 Android phones are activated every day across 39 manufacturers, but there is no single phone or Android manufacturer that can best the iPhone. By owning Motorola, Google can create Android phones to its exact specifications and take advantage of the latest advances in the operating system, just like Apple does. When CEO Larry Page says that buying Motorola will “supercharge” Android, that is what he means I suspect.
What about other Android manufacturers? Does Android now become a one-player game like the iPhone?
Not at all: According to Google, nothing will change in terms of Android’s open approach to mobile development. During Monday’s press call, Android head honcho Andy Rubin said he had talked to the “top five licensees” of Android software and that they “all showed enthusiastic support.” Samsung, Sony Ericsson, HTC, and LG all issued their own statements of support as well, though it’s hard to read too much into that type of bland and carefully crafted PR-speak. According to Rubin, “Android doesn’t make sense to be a single OEM.” And he’s right: It’s Android’s multimanufacturer, choice-driven approach that’s been a key factor in its meteoric rise within the mobile market. Phones like Samsung’s Galaxy S II and original Galaxy S have played a huge role in helping Android sales skyrocket. Google would be crazy to throw that all away; its challenge now will be finding a way to run Motorola without making everyone else feel like they’re at an extreme disadvantage. If Monday’s remarks are any indication, Rubin seems to be up to the challenge.
“We expect that this combination will enable us to break new ground for the Android ecosystem,” Rubin said. “However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices.”
Page is careful to note that “Android will stay open” and that Motorola will remain but one of many licensees. But there is no doubt that if the deal passes antitrust review, Motorola’s Android phones will be the first among equals. Google also gains a strong foothold in the living room with Motorola’s set-top box business, which could help its lackluster Google TV efforts ,Larry Page, CEO of Google, said, “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. 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. ”Sanjay Jha, CEO of Motorola Mobility, said, “This transaction offers significant value for Motorola Mobility’s stockholders and provides compelling new opportunities for our employees, customers, and partners around the world. We have shared a productive partnership with Google to advance the Android platform, and now through this combination we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home businesses. ”
Larry Page, CEO of Google, said, “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. 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. ”
Sanjay Jha, CEO of Motorola Mobility, said, “This transaction offers significant value for Motorola Mobility’s stockholders and provides compelling new opportunities for our employees, customers, and partners around the world. We have shared a productive partnership with Google to advance the Android platform, and now through this combination we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home businesses. ”
It’s a big bet. What if Google messes it up?
Well, it will still have all those mobile patents, which arguably could be worth a good portion of the total acquisition price. Remember, Nortel’s patents went for $4.5 billion to Google’s competitors. During today’s conference call explaining the deal, Page noted that Motorola’s “strong patent portfolio” will help Google defend Android against “Microsoft, Apple, and other companies.” The first two questions on the call went right to the patent issue as well. With Android under attack on the patent front by Apple, Microsoft, Oracle and others, buying Motorola is very much a defensive move as well.
