Google snaps up Motorola handset company for $12.5bn

Google has purchased Motorola to help it defend Android from existing and future patent litigation but will continue to run it as a separate business
Written by Ben Woods, Contributor

Google has agreed to buy Motorola Mobility, the company's handset business, in a bid to "supercharge the entire Android ecosystem", it said.

The two companies announced the deal on Monday. Google will pay $12.5bn (£7.6bn), equivalent to a cash value of $40 per share. It has already been given the green light by the boards of directors of both companies.

"The combination of Google and Motorola will not only supercharge Android, but will also enhance competition and offer consumers accelerating innovation, greater choice, and wonderful user experiences," Larry Page, Google chief, said in an announcement

Page also said that Google's intention is to maintain Android as an open operating system.

"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," he added. Google also said the purchase would help strengthen the Android patent portfolio, currently the subject of several alleged patent infringement suits, and better protect the OS from future patent claims.

Patent portfolio

In July, Sanjay Jha, Motorola chief executive spoke during an investors' earnings call about the company's extensive patent portfolio.

Motorola has a quite rich patent portfolio that will certainly come in handy to Google.
– Carolina Milanesi, Gartner

"As most of you know, we own one of the strongest and most respected patent portfolios in the industry," Jha said. "We have over 17,000 patents granted and over 7,000 patents pending with particular strength in 2G and 3G essential, non-essential patents important to the delivery of competitive products in the marketplace, particularly video compression, decompression and security technologies ."

Carolina Milanesi, mobile analyst at Gartner, also thinks that the patent portfolio was key to the acquisition.

"I cannot help but think though that patents play a big role in this acquisition. Motorola has a quite rich patent portfolio that will certainly come in handy to Google," Milanesi told ZDNet UK.

Motorola is currently embroiled in patent litigation with both Microsoft and Apple over its use of Android technology in its handsets. Google is also involved in a legal battle with Oracle over its use of the Dalvik Java virtual machine in Android.

Driving tablets

As well as providing extra intellectual property for Google, the deal could also help Google drive the tablet market forward and reduce fragmentation of the platform.

"Google needs to achieve less fragmentation with Android and move the tablet market ahead faster than they have so far. Acquiring Motorola, one of the most experienced partners, will help them do that," Milanesi added.

However, she also warned that Google will have to be careful not to alienate other manufacturers by promoting Motorola ahead of other manufacturers using the Android platform.

Despite Milanesi's concerns, the heads of HTC, LG and Sony Ericsson all said they welcomed "Google's commitment to defending Android and its partners".

The deal is subject to regulatory approval but is expected to complete by the end of 2011 or early in 2012, the companies said.

Get the latest technology news and analysis, blogs and reviews delivered directly to your inbox with ZDNet UK's newsletters.
Editorial standards