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Motorola Droid 3
Google will acquire Motorola Mobility for $12.5 billion USD

Well, we didn't see that one coming. Google just announced today via its official blog that itwould be acquiring Motorola Mobility, an American company that produces everything from the Wayans Family-esque lineup of Droid smartphones to the 10.1" Xoom tablet.

The transaction price comes in at a relatively modest (for Google) $12.5 billion, which at $40/share represents a 63 percent price premium over Motorola Mobility's closing price on Friday (MMI is up nearly 60 percent following the opening bell). Not surprisingly, the deal was unanimously approved by both companies' boards.

“This transaction offers significant value for Motorola Mobility’s stockholders and provides compelling new opportunities for our employees, customers, and partners around the world," said Sanjay Jha, CEO of Motorola Mobility. "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.”

“We expect that this combination will enable us to break new ground for the Android ecosystem," added Andy Rubin, Google's Mobile SVP. "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.”

If there are no legal roadblocks in Google's path, the deal will be completed by early 2012.

According to Google CEO Larry Page, the move to purchase Motorola Mobility will not have an affect on the openness of the Android operating system. "We will run Motorola as a separate business," said Page. "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."

Page goes on to say that we should expect to see great things on the hardware and software side of things:

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.

This purchase will also give Google access to a treasure trove of patents in order to defend itself from competitors. According to The Street, Motorola has a war chest of over 17,000 patents.

Interestingly, Motorola Mobility's Sanjay Jha seemed quite receptive to using Microsoft's Windows Phone 7 operating system just last week. We can now safely assume that those notions are completely dead.

Updated 8/15/2011 @ 3:30pm

Google has posted four quotes from other Android handset makers regarding the acquisition of Motorola Mobility. It seems quite odd how robotic and same-sounding all of the quotes are…

“We welcome today’s news, which demonstrates Google’s deep commitment to defending Android, its partners, and the ecosystem.” -- J.K. Shin, President, Samsung, Mobile Communications Division

“I welcome Google‘s commitment to defending Android and its partners.” -- Bert Nordberg, President & CEO, Sony Ericsson

“We welcome the news of today‘s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.” -- Peter Chou, CEO, HTC Corp.

“We welcome Google‘s commitment to defending Android and its partners.” -- Jong-Seok Park, Ph.D, President & CEO, LG Electronics Mobile Communications Company

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By kleinma on 8/15/2011 9:34:31 AM , Rating: 4
I wonder if this is actually a good thing for companies like Microsoft.

I wonder how attached to Android companies like HTC, Samsung, and LG are going to want to be now that google is an OS and hardware vendor for its platform. Could make them shift focus towards other platforms.

RE: interesting....
By ltcommanderdata on 8/15/2011 9:52:24 AM , Rating: 3
Well it seems all the major platforms now are moving toward tight hardware+software integration. There is of course Apple with iOS/iPhone, HP with WebOS/Pre, RIM with QNX/Blackberry, then Microsoft with WP7/Nokia phones, and now Google with Android/Motorola phones.

That kind of leaves HTC, Samsung, LG, etc as the odd men out. Yes they can still compete on features, since first-party devices will probably focus on pushing a very strong core feature set leaving room on the sides, but this will limit margins since they can't likely charge a whole lot more even with more features. Plus, if Google wants to save one or two flashy, new features for their own first-party phones under the premise of getting it ironed out before rolling it out to other manufacturers, other OEMs will also be at a disadvantage.

RE: interesting....
By kleinma on 8/15/2011 10:25:30 AM , Rating: 3
Other than piles of cash, I don't know if anything has been promised to Nokia in terms of Win7 phone to give it an edge on the software side of things versus other phone makers who decide to use Win7 phone. I believe the whole nokia deal was done because none of these android handset makers were really expressing any interst in putting out phones with win7 phone platform. Sure some did make handsets, but they were released using the same hardware that droid phones had already had for over a year.

RE: interesting....
By ltcommanderdata on 8/15/2011 10:36:17 AM , Rating: 2
I don't have the original article, but I seem to remember that Nokia was supposed to get more flexibility to modify the OS, not necessarily redesign the UI, but add things, access to lower levels of the OS, etc. Perhaps Microsoft was always planning on slowly opening things up for OEM customization as subsequent versions of WP7 are released and Nokia is just the first to get visibility on this.

RE: interesting....
By tng on 8/15/2011 10:31:48 AM , Rating: 2
That kind of leaves HTC, Samsung, LG, etc as the odd men out. Yes they can still compete on features
Well most of the people I know don't really care if it is an Iphone, Android, WP7, etc.... They look at smart phones as a whole group of the same thing, only features matter, not OS. Most of the people I know who have smart phones don't know what an OS is or even care.

I think that places like HTC, LG and Samsung will do fine, as long as they make competitive phones.

RE: interesting....
By MrTeal on 8/15/2011 10:56:04 AM , Rating: 2
Well most of the people I know don't really care if it is an Iphone, Android, WP7, etc.... They look at smart phones as a whole group of the same thing, only features matter, not OS. Most of the people I know who have smart phones don't know what an OS is or even care.

You must know a lot smarter people than I do, I'm afraid, and I'm an EE. There's definitely a decent number that look at the phones more critically, but for the vast majority they want the iPhone with the most Gee Bees. Even among the people with Android phones, a lot bought them because you can get a Galaxy S for free with a 3 year activation, while an iPhone 4 32GB is $270 with 3 year activation. If they were the same price there would be even more iPhones out there.

RE: interesting....
By Dr of crap on 8/15/2011 12:34:17 PM , Rating: 2
Not sure WHY you'd want to shell out for a damn cell phone.

The carriers offer either free or reduced prices.
I haven't paid over $40 for a cell yet!

And it matters not to me what KIND ( manufacturer ) it is!

RE: interesting....
By tng on 8/16/2011 8:19:31 AM , Rating: 2
You must know a lot smarter people than I do, I'm afraid, and I'm an EE.
I am an EE as well, although most of my work is on a micron level now.

You misunderstand me I think. The people that I know are not really choosy about the phone that they own, only that it is a smart phone and it has certain features, the brand does not matter as much as long as the price is right and it is with their favorite carrier.

RE: interesting....
By nafhan on 8/15/2011 1:27:45 PM , Rating: 2
It will boil down to how Google handles Motorola. The best thing for the Android OS would obviously be to keep it open - as it is now. However, Google may end up having to choose between what's best for Android and what they perceive as best for Google corporation.

That said, if Google plans to continue with a primarily ad and service oriented revenue stream, what's best for Android and what's best for Google are the same. So, they would not want to risk alienating current partners. Either way, this is going to shake things up!

RE: interesting....
By Gungel on 8/16/2011 7:49:32 AM , Rating: 2
It seems like the stock market agrees with you, Microsoft and Nokia stocks are up and Google is down.

RE: interesting....
By Lazarus Dark on 8/16/2011 10:59:30 PM , Rating: 2
Actually, you should ask how attached are Android users to android. Android users aren't going to start buying MS phones just because HTC stops making Androids, they will buy whatever is the best Android phone available. The manufacturers cant afford to stop making Android phones.
Besides, if they innovate and make the better Android phones than Moto+Google, then there should be no problem. They can't whine about this Moto acquisition, they need to just step up and make better phones to compete. I guarantee if Moto+Google makes crappy phones I wont be buying them, I will go with the best HTC or Samsung has at the time.

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