Google to Buy Motorola for Both Patents and Hardware
Google and Motorola Mobility have reached a definitive agreement whereby the search giant will acquire the phone maker for $12.5 billion. While some people believe the deal will give Google control over Motorola's wide patent portfolio, Google's chairman Eric Schmidt made it clear that his company is interested not only in the manufacturer's patents, but also its hardware business.
The proposed price equates to $40 per share in cash, and represents a premium of 63 percent over the closing price of Motorola Mobility shares on August 12, 2011. Subject to regulatory approval, the transaction is expected to close by the end of 2011 or the beginning of 2012.
On the official Google blog, the company reiterates its commitment to Android as an open platform and a vibrant open source community, and promises that it will continue to work with its Android partners to develop and distribute Android-based devices. Even after the acquisition, Motorola will remain a licensee of Android and run as a separate business. Google also believe the deal will supercharge the Android ecosystem and enhance competition in mobile computer.
Obviously, one of the reasons behind Google's move is the 17,000 patents owned by Motorola. As CEO Larry Page pointed out, the collaboration will increase competition by strengthening Google's patent portfolio, which will enable it to better protect Android from anti-competitive threats like Microsoft and Apple.
In the meantime, the deal also brings Motorola's handset expertise to the search giant. "We are excited to have the product line, to use the Motorola brand, the product architecture, the engineers", said Schmidt during an interview at the annual Dreamforce conference.
Schmidt's statement gives a hint on Google's interest in creating its own hardware system and joining the phone manufacturing industry. This will put the company in a better position to compete against Apple and other mobile OS makers.
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