http://www.mercurynews.com/top-stories/ci_18684398
In a move that changes the landscape of the highly competitive mobile devices industry, Google (GOOG) said Monday that it will pay $12.5 billion to acquire phone-maker Motorola Mobility.
The deal, which has been approved by the boards of both companies, will give Google its own hardware products and allow it to compete more closely with phone- and tablet-makers such as Apple (AAPL), Hewlett-Packard (HPQ) and the new alliance between Microsoft and Nokia.
It also gives Google access to thousands of patents held by Motorola, which pioneered the cellphone business. Analysts said that could help the Mountain View company stave off a barrage of patent claims levied by Apple, Microsoft and other rivals against Google's Android operating system.
Fundamentally, the decision to buy Motorola underscores the growing importance of mobile computing to Google, which draws most of its revenue from selling advertising associated with Internet searches, as consumers and workers
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are increasingly performing more computing tasks with handheld devices.
Android is already the most popular operating system for mobile devices in the world, used by Motorola and other manufacturers such as HTC and Samsung. Google said it will continue to let other companies use the Android platform for their devices.
But with the addition of Motorola's hardware operation, Google CEO Larry Page said in a blog post Monday, "together we will create amazing user experiences that supercharge the entire Android ecosystem."
Google said it will pay $40 a share in cash for Motorola Mobility's stock, a premium 63 percent higher than the stock's closing value on Friday. Shares in Motorola Mobility were climbing on Monday.
"This transaction offers significant value for Motorola Mobility's stockholders and provides compelling new opportunities for our employees, customers and partners around the world," Motorola Mobility CEO Sanjay Jha said in a statement.
Illinois-based Motorola Mobility became a stand-alone company earlier this year after venerable electronics manufacturer Motorola decided to split its operations into two independent units. Its sibling, Motorola Solutions, focuses on commercial technology and networking.
Buying the new company gives Google its own manufacturing operation for the first time. Google had briefly dipped its toe into the business of selling phones by contracting with HTC to build the Nexus phone, using Android software, but analysts said the venture was not particularly successful.
Leading competitors such as Apple and Research in Motion, which makes Blackberry phones, use their own software on devices they design and manufacture. Nokia has done the same, although it recently announced a partnership in which Nokia will use Microsoft's Windows Phone operating system on all of its phones.
Google, meanwhile, had followed a strategy of letting a variety of device manufacturers use the Android operating system at virtually no cost, while Google made money by selling ads associated with Internet searches conducted on the Android platform.
Now, the Mountain View search giant said it plans to run Motorola Mobility as a separate business.
"This acquisition will not change our commitment to run Android as an open platform," Page added in his blog post. "Many hardware partners have contributed to Android's success and we look forward to continuing to work with all of them to deliver outstanding user experiences."
Despite that pledge, some analysts said the new combination could create some confusion or conflict with other manufacturers that use Android in their smartphones and tablets. The deal could also complicate relationships with some wireless carriers, according to Mike Abramsky, an analyst with RBC Capital Markets.
But analysts said the prospect of acquiring Motorola's patents could make the deal especially attractive to Google.
Motorola Mobility has a portfolio of more than 17,000 patents, according to Trip Chowdhry, a tech industry analyst with Global Equities Research, who said that should help Google defend itself and other makers of Android devices against a wide-ranging series of patent claims that have been levied by Apple, Microsoft and even Oracle (ORCL).
Experts say the mobile-computing industry has become a hotbed of patent lawsuits, as several large players have begun fighting for turf in a growing and highly profitable market. Owning a healthy portfolio of patents can be a strong defense against challenges, experts say, because it allows a company to tell its rivals: "If you sue me, I'll sue you."
Page acknowledged this strategy, saying: "Our acquisition of Motorola will increase competition by strengthening Google's patent portfolio, which will enable us to better protect Android from anticompetitive threats from Microsoft, Apple and other companies."
But analyst Abramsky cautioned that most of Motorola's patents involve wireless communications technology, while Apple has more patents for things like touchscreen capabilities and user interfaces.
"This may not necessarily mitigate some of the IP wars currently under way," Abramsky wrote in a note to clients, in which he referred to the current intellectual-property battles. But he said the deal "positions Google to defend itself against more fundamental patent attacks and gives it more leverage in patent negotiations" with Apple, Microsoft
I bought GOOG in the dutch IPO back in the 90's for around 110/share. sold to pay back my initial investor and watching my retirement grow every year and this will just make them stronger. But my prediction is the FCC will come along in a few years and cry monopoly as GOOG buys more and more little companies.
In a move that changes the landscape of the highly competitive mobile devices industry, Google (GOOG) said Monday that it will pay $12.5 billion to acquire phone-maker Motorola Mobility.
The deal, which has been approved by the boards of both companies, will give Google its own hardware products and allow it to compete more closely with phone- and tablet-makers such as Apple (AAPL), Hewlett-Packard (HPQ) and the new alliance between Microsoft and Nokia.
It also gives Google access to thousands of patents held by Motorola, which pioneered the cellphone business. Analysts said that could help the Mountain View company stave off a barrage of patent claims levied by Apple, Microsoft and other rivals against Google's Android operating system.
Fundamentally, the decision to buy Motorola underscores the growing importance of mobile computing to Google, which draws most of its revenue from selling advertising associated with Internet searches, as consumers and workers
Advertisement
are increasingly performing more computing tasks with handheld devices.
Android is already the most popular operating system for mobile devices in the world, used by Motorola and other manufacturers such as HTC and Samsung. Google said it will continue to let other companies use the Android platform for their devices.
But with the addition of Motorola's hardware operation, Google CEO Larry Page said in a blog post Monday, "together we will create amazing user experiences that supercharge the entire Android ecosystem."
Google said it will pay $40 a share in cash for Motorola Mobility's stock, a premium 63 percent higher than the stock's closing value on Friday. Shares in Motorola Mobility were climbing on Monday.
"This transaction offers significant value for Motorola Mobility's stockholders and provides compelling new opportunities for our employees, customers and partners around the world," Motorola Mobility CEO Sanjay Jha said in a statement.
Illinois-based Motorola Mobility became a stand-alone company earlier this year after venerable electronics manufacturer Motorola decided to split its operations into two independent units. Its sibling, Motorola Solutions, focuses on commercial technology and networking.
Buying the new company gives Google its own manufacturing operation for the first time. Google had briefly dipped its toe into the business of selling phones by contracting with HTC to build the Nexus phone, using Android software, but analysts said the venture was not particularly successful.
Leading competitors such as Apple and Research in Motion, which makes Blackberry phones, use their own software on devices they design and manufacture. Nokia has done the same, although it recently announced a partnership in which Nokia will use Microsoft's Windows Phone operating system on all of its phones.
Google, meanwhile, had followed a strategy of letting a variety of device manufacturers use the Android operating system at virtually no cost, while Google made money by selling ads associated with Internet searches conducted on the Android platform.
Now, the Mountain View search giant said it plans to run Motorola Mobility as a separate business.
"This acquisition will not change our commitment to run Android as an open platform," Page added in his blog post. "Many hardware partners have contributed to Android's success and we look forward to continuing to work with all of them to deliver outstanding user experiences."
Despite that pledge, some analysts said the new combination could create some confusion or conflict with other manufacturers that use Android in their smartphones and tablets. The deal could also complicate relationships with some wireless carriers, according to Mike Abramsky, an analyst with RBC Capital Markets.
But analysts said the prospect of acquiring Motorola's patents could make the deal especially attractive to Google.
Motorola Mobility has a portfolio of more than 17,000 patents, according to Trip Chowdhry, a tech industry analyst with Global Equities Research, who said that should help Google defend itself and other makers of Android devices against a wide-ranging series of patent claims that have been levied by Apple, Microsoft and even Oracle (ORCL).
Experts say the mobile-computing industry has become a hotbed of patent lawsuits, as several large players have begun fighting for turf in a growing and highly profitable market. Owning a healthy portfolio of patents can be a strong defense against challenges, experts say, because it allows a company to tell its rivals: "If you sue me, I'll sue you."
Page acknowledged this strategy, saying: "Our acquisition of Motorola will increase competition by strengthening Google's patent portfolio, which will enable us to better protect Android from anticompetitive threats from Microsoft, Apple and other companies."
But analyst Abramsky cautioned that most of Motorola's patents involve wireless communications technology, while Apple has more patents for things like touchscreen capabilities and user interfaces.
"This may not necessarily mitigate some of the IP wars currently under way," Abramsky wrote in a note to clients, in which he referred to the current intellectual-property battles. But he said the deal "positions Google to defend itself against more fundamental patent attacks and gives it more leverage in patent negotiations" with Apple, Microsoft
I bought GOOG in the dutch IPO back in the 90's for around 110/share. sold to pay back my initial investor and watching my retirement grow every year and this will just make them stronger. But my prediction is the FCC will come along in a few years and cry monopoly as GOOG buys more and more little companies.
