Google buys Motorola Mobility

16 August 2011

MOUNTAIN VIEW, California: Google, the online giant, has agreed to buy Motorola Mobility, the telecoms company, for $12.5bn, in a move set to "supercharge" its mobile and tablet activities.

Google launched Android, its mobile operating system, in November 2007, and 150m devices powered by this software have now been purchased globally, a number rising by 550,000 per day.

It works with an estimated 39 manufacturers and 231 carriers in 123 countries, and Motorola's choice to "bet big" on Android in 2008 encouraged the takeover, although Android is to remain open source.

"Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere," Larry Page, Google's CEO, wrote on a corporate blog.

More broadly, Motorola's presence in the home devices and video solutions sectors proved especially attractive, given the increasing shift towards internet protocol technologies.

"We believe that their mobile business is on an upward trajectory and poised for explosive growth," Page said.

Colin Gillis, an analyst at BGC Partners, suggested Google's acquisition of Motorola constituted an attempt to replicate Apple's model of making both physical products and systems to power them.

"What is says is that Google wants to provide a total experience that's hardware and software," he said. "Motorola Mobility is not that good of a business. Hardware alone is not a money maker."

Charles Golvin, an analyst at Forrester, argued Google's strategy risked "alienating" allies like Samsung, LG and HTC, and added intellectual property protection was one key factor behind this decision.

"Acquiring Motorola Mobility gives Google a strong IPR position across more than just smartphones and enables the company to craft experiences that provide continuity across multiple screens," he said.

Carolina Milanesi, an analyst at Gartner, asserted the tie-up could be influenced by Google's desire to take on Apple, and other rivals such as Microsoft and Hewlett-Packard, in the tablet sector.

"With Windows 8 coming next year and H-P talking about possibly licensing WebOS, there are more possible alternatives in the tablet space," she said. "In the smartphone space, Android is too strong of a force to do without."

Data sourced from Google, Forrester, Wall Street Journal, Reuters; additional content by Warc staff