Google Buying Motorola Mobility for $12.5 Billion to Boost Its Smartphone Power

3 minute read
Geoff Spick avatar

Google (news, site) is making a major investment in its mobile and Android business by buying Motorola's Mobility Division. Is this a strategic patent grab or a tactical technology move?

Mobility Issues

With most of the mobile players rushing around snapping up patents, through acquisitions or partnerships, either to protect themselves from legal action or to increase their ability to pursue others in the courts, Google has dropped a bit of a bombshell with the announcement that it is buying Motorola Mobility, the mobile division of the global telecom company.

Motorola split itself into two companies, the mobile and solutions divisions, not long ago and Google's US$ 40 a share offer (some 62% up on last week's stock price) will bag its technology including the likes of the Motorola Xoom tablet and a range of smartphones including the recent Atrix, Defy and Fire models plus Motorola's decades of experience and technology -- and, of course, a stack of patents.

Successors to Motorola's Xoom could be a much bigger deal
Successors to Motorola's Xoom could be a much bigger deal

A Smartphone Move

Google stated that it plans to run the company as a distinct entity with the deal likely to close by the end of the year or in early 2012. Google will also not stop others from using Android technology. By owning some mobile hardware, Google would be better placed to challenge Apple and the Microsoft/Nokia alliance.

With the current scattershot approach to Android firmware updates causing much resentment among users, by owning Motorola Google would hope to attract brand loyalty and could offer a better experience by getting those updates out first on its own devices. Ultimately, though, this is about the ongoing patent war and puts Android in a stronger position to defend itself again the onslaught of its rivals.

Expect the big winners to the lawyers in that game, but for the end user, it could make for a more interesting future with Microsoft/Nokia and Google/Motorola forming better-defended partnerships with slightly superior offerings.

Learning Opportunities

BlackBerry shouldn't lose too much sleep as its latest phones are getting out ahead of this ruckus. Microsoft may be the immediate loser as Motorola was keen to offer a range of Windows 7 phones -- something that now probably won't happen.

Microsoft/Nokia Respond

UPDATE: After looking like rather bad news for Microsoft, today seems to hint at a slightly less gloomy scenario with the possibility that former Android-diehard makers could hedge their bets with more Windows Phone 7 models. Nokia weighed into the debate late Monday with the following.

This further reinforces our belief that opportunities for the growth of Nokia’s smartphone business will be greatest with Windows Phone. This could prove to be a massive catalyst for the Windows Phone ecosystem. Additionally, with our respective intellectual property portfolios, Nokia and Microsoft are working together to build and nurture an innovative ecosystem that benefits consumers, operators, developers and other device manufacturers.

So, while most smartphone maker stocks rose on the news, the future looks a little more mixed than early indications suggested. The Android makers all made very cookie-cutter PR comments, expect the true story to emerge over the following days.

Meanwhile, unless RIM's new models are a roaring success, BlackBerry could find itself looking for a partner to help it compete in this new land of giants, something Bloomberg discusses here.