Posted August 15, 2011 9:24 am by with 5 comments

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This time last year, Google was licking its wounds after the dismal failure of its Nexus One phone.

You know, the one designed and sold by Google. A complete Android package from the search giant.

So what better way to celebrate the one year anniversary of that failed experiment than by coughing up $12.5 billion, in CASH, for Motorola and jumping feet first into the handset manufacturing business?

I know, you’re checking to make sure it’s not April 1st, but this is hot off the wire:

Google Inc. (NASDAQ: GOOG) and Motorola Mobility Holdings, Inc. (NYSE: MMI) today announced that they have entered into a definitive agreement under which Google will acquire Motorola Mobility for $40.00 per share in cash, or a total of about $12.5 billion, a premium of 63% to the closing price of Motorola Mobility shares on Friday, August 12, 2011. The transaction was unanimously approved by the boards of directors of both companies.

The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

Big news, huh? Now Google’s heading for uncharted waters with this acquisition. So many questions are raised, including:

  • How will other handset makers react to this? Will they go running to Windows?
  • How will Microsoft react to this? Will it go running out to buy its own handset manufacturer?
  • How will Apple react to this?
  • And, how will the FTC react to this?

That last question seems to be the one that Google CEO Larry Page is most concerned with–going on the offensive in a blog post announcing the acquisition (emphasis added):

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.

In other words, this is just poor little Google trying to bring a little balance to the Microsoft/Apple dominance.

What are your thoughts Pilgrims?

  • I’m all for it! Now my DroidX can, in essence, become a pure Google phone without the added Motorola layer. I like that.

    As for the big picture? They needed to do this because Apple still has them on several fronts with the first being that the reason the iPhone works so well is that the hardware and software happen under one roof and with a unified mission. Android as an OS, as it stands now, is too fragmented and it hurts Google’s performance in a “product” that is supposed to be theirs!

    Now they can just try to be the best within their own house (hardware and software working together) and others can still take their best swipe at it as well. This is where the “openness” of Android is brilliant because everyone can have it and do as they wish including Google. As a result, the Android market gets more competitive and where it falls short against the iPhone now these gaps will likely close.

    Will it ever be as good as an iPhone. Who knows but it will be better than the current Android delivery. See what impact that has had in an inferior state as it is today. Imagine what might happen in the future.

    This will be very interesting to watch for sure.

    • I’m not so sure Frank. Motorola will be kept as a separate entity and they will still only officially receive a license for Android.

      At least initially, Google will keep Android open for all. That will prevent them from achieving the same tightly knitted product that Apple has with the iPhone. I think to truly compete, Google would need to blend Motorola and Android into one and make it an exclusive offering.

      Then again, I’m just speculating like everyone. 😉

      • Why in the world would you do this then if you didn’t have that end game? Did they really have $12.5b just burning a hole in their pocket? Wish I had that “problem”!

        I think they can keep it open for all and still create their own truly Googleized version of OS and hardware. All they have done is likely removed whatever issued kept the Nexus from going anywhere because of dealing with a true third party hardware provider.

        No matter how it shakes out it’s going to be a fun watch and a b-school case study of either hyper success or spectacular flame-out.

  • I agree with Frank, there has to be some end game of this acquisition. Have to see Motorola handsets having some sort of advantage being on the inside of Google.

  • Mobile phones are hot selling cakes & competition is intense. I read somewhere that Nokia is also facing competition due to low cost mobile phones and now google comes in & buys motorola. Technologically speaking google will indeed benefit from this deal as they will have advantage of hardware power, however keeping the cost on lower side would be most important as well. Guess who is going to benefit from these types of deals ? It’s us the public 🙂