Google to Acquire Motorola Mobility


Google Inc. and Motorola Mobility Holdings, Inc. 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.

Official Google Blog:

This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. 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.

In the conference call with financial analysts today, at the 5:50 point, Larry Page:

Motorola also has a strong patent portfolio, which will help protect Android from anti-competitive threats from Microsoft, Apple, and other companies.

I believe patent acquisition is the reason why Google is buying Motorola Mobility, who has 17,000+ patents issued worldwide with 7500+ pending. The anti-competitive threat now becomes Google itself. During the conference call Andy Rubin shared the top five Android licensees were all enthusiastic about the news. What BS.

Google has bought itself a catch-22. It seems Google, in order to protect its Android platform from patent lawsuits, has opened a Pandora’s Box: the biggest Android licensees are probably not happy at all. HTC, Samsung, et al. will be increasingly suspicious of Google especially if Motorola comes out with successful Android smartphones in the future.

Horace Dediu:

The lesson (and warning) was that a licensor that is also a licensee makes other licensees uncomfortable. The supplier is also a competitor. This is classic channel conflict and never ends well.

What I see as a potential long-term outcome is most if not all major Android licensees will abandon the platform forcing Google to vertically integrate and enter into the business of manufacturing Android smartphones with Motorola Mobility.

Update: Quotes from Android partners:

Samsung Mobile Communications Division, President, J.K. Shin:

We welcome today’s news, which demonstrates Google’s deep commitment to defending Android, its partners, and the ecosystem.

Sony Ericsson, President & CEO, Bert Nordberg:

I welcome Google‘s commitment to defending Android and its partners.

HTC, CEO, Peter Chou:

We welcome the news of today‘s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.

LG Electronics Mobile Communications Company, President & CEO, Jong-Seok Park:

We welcome Google‘s commitment to defending Android and its partners.

They all sound like androids.

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