Google buys Motorola for $12.5 billion

Google buys Motorola for $12.5 billion

In what might be one of the biggest stories this year, we have just learn that Google has acquired Motorola for a reasonable (sarcasm alert) $12.5 billion, or $40 per share, in cash. Or to put in laymen terms, Google have just bought Motorola Mobility, a company famous for kick starting the Android Juggernaut and setting it on it’s way with the launch of the Motorola Droid, a phone we still feel was one of their best phones in years.

Google has said that they will be making Motorola a dedicated Android Partner (you would hope so) to supercharge the Android Ecosystem in order to enhance the competition in mobile computing. We’ll obviously be bringing you more on this but since this is breaking news, there could be plenty more news to follow in the coming days (See Press Release Below as well).

Google may have the most valuable (and biggest) website in the world, and it clearly seems like they have an immense amount of cash to throw around, thanks to their Android Operating System chugging along, currently making it the biggest and most used Operating System in the world. Obviously Motorola will continue to make phones, but now that Google has bought them, it’s clear that Motorola will only be using only Android from now on, closing the door for any potential Windows Phone deals with Microsoft (especially since Microsoft is currently suing Motorola for certain patents).

In retrospect, it’s interesting when you think that Motorola cost only $12.5 billion (another sarcasm alert), when a company like Skype cost Microsoft $8.5 billion! Still, it seemed that Motorola needed something big to snap them out of their dying business ($56 million loss in Q2 speaks volumes about their sales). We would presume and assume, that Motorola products (including phones and tablets) will be the first to receive new Android updates, but that’s if Motorola continues to operate as a separate mobile entity, which is still possible even now. It’s possible Google might re-brand all future Motorola phones with their Google Logo, (or something silly like Goorola or Googmo), but the most likely scenario is that Motorola will now work with Google and continue to produce Motorola badged phones, under the Google name. That for us makes sense since Motorola is a well established name, and despite their dismal Q2 results, people will still continue to buy their phones. It’s a smart move by Google that’s for sure, and not one we saw coming. Will it pay off in the long run? Maybe… as Android continues to destroy the competition in terms of sales around the world and usage.

The one BIG problem we see from this acquisition of Motorola? Let’s put it this way – The other big phone companies, HTC & Samsung, have always been strong Android partners with Google, producing phones like Nexus S (Samsung); Nexus One and the original Android phone – the G1 (HTC). Will HTC and Samsung really be willing to work with Google as closely now since Motorola will have first pick on anything Android related and will always receive backing from Google before the other companies now? That’s the big questions that remains, and we’d be incredibly interested in seeing how they will react to this move (despite the quotes below from company heads).

Peter Chou, CEO, HTC:

We welcome the news of today’s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.

Bert Nordberg, President & CEO, Sony Ericsson:

I welcome Google’s commitment to defending Android and its partners.

Jong-Seok Park, President & CEO, LG:

We welcome Google’s commitment to defending Android and its partners.

Still, with this deal, those companies might start looking up to Microsoft and trying to cosy up to them in order to get better Windows Phone 7 deals. Who knows.

Press Release:

Since its launch in November 2007, Android has not only dramatically increased consumer choice but also improved the entire mobile experience for users. Today, more than 150 million Android devices have been activated worldwide—with over 550,000 devices now lit up every day—through a network of about 39 manufacturers and 231 carriers in 123 countries. Given Android’s phenomenal success, we are always looking for new ways to supercharge the Android ecosystem. That is why I am so excited today to announce that we have agreed toacquire Motorola.

Motorola has a history of over 80 years of innovation in communications technology and products, and in the development of intellectual property, which have helped drive the remarkable revolution in mobile computing we are all enjoying today. Its many industry milestones include the introduction of the world’s first portable cell phone nearly 30 years ago, and the StarTAC—the smallest and lightest phone on earth at time of launch. In 2007, Motorola was a founding member of the Open Handset Alliance that worked to make Android the first truly open and comprehensive platform for mobile devices. I have loved my Motorola phones from the StarTAC era up to the current DROIDs.

In 2008, Motorola bet big on Android as the sole operating system across all of its smartphone devices. It was a smart bet and we’re thrilled at the success they’ve achieved so far. We believe that their mobile business is on an upward trajectory and poised for explosive growth.

Motorola is also a market leader in the home devices and video solutions business. With the transition to Internet Protocol, we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space.

Motorola’s total commitment to Android in mobile devices is one of many reasons that there is a natural fit between our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere.

This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. 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.

We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.

The combination of Google and Motorola will not only supercharge Android, but will also enhance competition and offer consumers accelerating innovation, greater choice, and wonderful user experiences. I am confident that these great experiences will create huge value for shareholders.

I look forward to welcoming Motorolans to our family of Googlers.

Posted by Larry Page, CEO

Source: Official Google Blog


Founder and Chief Editor of Techin5, currently based in Melbourne Australia. Has always had a deep appreciation of Technology and how it helps people, which led to the birth of Techin5. You can follow me on Twitter at @jubbing and on Instagram