Google becomes mobile maker: $12.5bn Motorola Mobility deal gets green light

24/05/2012

Google has finally completed its $12.5bn acquisition of Motorola Mobility after regulators in China gave the deal a seal of approval over the weekend. Having announced the bid back in August 2011, it has taken nearly a year of negotiations and fending off inquiries from authorities to complete the move. It had been claimed Google would keep its Motorola subsidiary at arm's length, but the appointment of long-time Googler Dennis Woodside as CEO of Motorola Mobility suggests a more inclusive operation.

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Sanjay Jha steps down as MM's CEO and Google Chief Exec Larry Page has described his replacement as, "phenomenal at building teams and delivering on some of Google's biggest bets" - a nod to Woodside's previous roles in establishing Google in the Middle East, Africa and Eastern Europe.

Writing on the company blog, a delighted Page commented, "Motorola is a great American tech company that has driven the mobile revolution. And as a company who made a big, early bet on Android, Motorola has become an incredibly valuable partner to Google. I'm confident Dennis and the team at Motorola will be creating the next generation of mobile devices that will improve lives for years to come".

Fallout from the deal also includes talk of Google resurrecting their foray into television. Google TV has been widely regarded as a failure thus far, but with set-top boxes featuring heavily in MM's manufacturing armoury, telecoms analyst Roger Entner believes Page and co will be have one eye firmly set on the television market.

Motorola Mobility was the mobile devices division of Motorola which was in founded 1928 and the home division. The divisions began trading as a separate independent company on January 4, 2011.

Motorola's other business, Motorola Solutions, will remain a separate company with no ties to Google.

Motorola has been committed to Android since 2008 when the company chose Android as its sole operating system for the phone maker’s smartphones. Google also sees value in other parts of Motorola's business, such as home devices and video solutions.

In addition, Google stands to gain a large number of patents with the purchase, which will aid it in the on-going litigation that Android faces.

According to Google, this purchase will not change how Android is offered as an open platform. Motorola will still be a licensee of Android, and the platform will still be open for other manufacturers to use.

Google says that the purchase will allow the two companies to "supercharge" for the "benefit of consumers, partners and developers everywhere."

Conflicts with HTC and Samsung?

Despite Google's promises of keeping Android an open platform, the move could cause conflicts with Google's partners, such as HTC and Samsung.

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."

'Strain on Android ecosystem'

Ovum analyst Nick Dillon said the buy could raise wider concerns for the Android platform: “As noted by Google, a key objective of the acquisition is to gain access to Motorola’s sizable patent portfolio, rather than just its hardware business. Having been outbid in the recent sell-off of Nortel’s patent portfolio, Google was clearly willing to look elsewhere to build up its arsenal of IP and in the light of the growing number of IP legal disputes in the smartphone market; this move will put Google in a stronger position competitively.

“However, the move raises concerns for the wider Android ecosystem as the acquisition means that Google will become a hardware vendor. With this, Google will move from the position of partner, to that of competitor to Android handset manufacturers, potentially placing significant strain on the Android ecosystem.

“If, for example, Google provides preferential access to the Android code to its own hardware division, this would place other vendors at a disadvantage and may lead them to question their commitment to the platform, potentially pushing some towards other platforms,” Dillon concluded.

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