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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 Tony Swash on 8/15/2011 5:54:27 PM , Rating: 0
What the Motorola acquisition says to me is fairly simple. Google got itself into a deep, deep legal hole with Android. The Android team at Google decided to play fast a loose with other peoples IP and very rapidly Google found itself, and it's OEMs, surrounded by very real legal threats. So the 12 billion plus purchase of Motorola, operating loses and tens of thousands of employees included, was a vast play to head of the legal threats which Google knows are real. Its an admission of guilt. Yes we stole a lot of stuff, yes we acted rashly and unethically but now we have some big clubs to beat of the attacker. Maybe.

I have said it before and I will say it again. Android is a terrible strategic error by Google. It makes Google no money, it solves no strategic problem, it opens no new revenue streams of any substance, it opens a world of legal pain, it has turned an array of very large and powerful tech players (not least Apple) into becoming enemies and it has pushed Google from its path of 'do no evil' on to the path of duplicity. Why? For no good reason I can see. Can anyone else explain why Android is good for Google?

By Tony Swash on 8/15/2011 6:11:18 PM , Rating: 2
I could be wrong of course. As soon as I had penned the comment above I came across this article arguing the opposite case. Sounds cogent but I still tend towards the defensive move scenario. Time will tell.

By gooing on 8/15/2011 10:02:14 PM , Rating: 2
I like this summary - fleshes out a more reasoned business case than the superficial defense-one.


The logical response to your Android criticism Tony, is, how does Google go about monetising Android in ways other than what it does now? Perhaps step one is to become more vertically integrated? Certainly this move preserves Android's position in the market and makes it less dependent on being flavour of the day with the OEMs.

The IP defense may or may not prove to be the sleeper-hit of the deal, we will just have to wait and see how this pans out in the litigation process.

"And boy have we patented it!" -- Steve Jobs, Macworld 2007

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