Google has announced that it has acquired Motorola Mobility, makers of Android devices, including the Xoom tablet and numerous Droid smartphones, for $12.5 billion.
“Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business,” he said.
Andy Rubin, Google SVP of mobile, reiterated Google’s commitment to working with other manufacturers, like Samsung, LG and HTC. “We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices.”
From Page’s comments, it appears Google will continue to run Motorola Mobility as a separate hardware maker, and not an extension of the Google or Android brand. Google has had a close relationship with Motorola, collaborating with the Droid maker on the first Honeycomb tablet, the Xoom. However, Google has also worked closely with other hardware makers on other flagship products, including HTC with the original Android phone, the G1, and recently Samsung with the Nexus S.
For their part, representatives from HTC, Sony Ericsson and LG have released statements expressing support for the acquisition, which they view as a sign Google is committed to defending its Android partners.
The deal is Google’s biggest to date, according to Reuters. The search giant will pay $40 per share in cash, which represents a 63% premium over Motorola’s Friday closing price on the NYSE.
Reasons to Buy
With a move to hardware, Google may be emulating Apple’s strategy of controlling development of both the software and device. Because Apple builds both the iPad and iOS, Apple eliminates the headaches of incompatibilities between both elements that often result in device bugs. The future tablets created by Motorola/Google may be more stable and efficient, two words often used to describe the iPad, than the current crop of Honeycomb slates.
The acquisition also directly inserts Google into Apple’s recent legal action against Motorola. Apple was suing the Motorola in German court over patent infringements regarding the Xoom. Apple had also pursued Samsung over similar allegations for the Galaxy Tab 10.1, and recently won an injunction that resulted in the ban of Galaxy Tab 10.1 sales in most of EU.
By keeping Motorola Mobility a separate entity, Google is indicating the Motorola purchase represents the beginnings of a Google hardware strategy. However, Google may also have been interested in Motorola’s patent portfolio as Google recently lost a bid to purchase the recently bankrupt Nortel’s patents.