In a surprise move this week, on August 15, Google announced it will acquire Motorola Mobility Holdings Inc. (MMI (NYSE)) for a whopping $12.5 billion. This is Google’s most expensive acquisition to date. Motorola Mobility was formerly known as the Mobile Devices sector of Motorola, Inc. until it was broken off as a separate entity in January 2011. It stands as a maker of mobile devices including smartphones and set-top-boxes providing video solutions. In 2008, Motorola made the decision to have Android be the sole operating system across all of its devices, producing the popular “Droid” series of smartphones .
Larry Page, CEO of Google, announced this news on his blog early Monday morning, mentioning that MMI will run as a separate business and that this acquisition will not hinder the relationship between Google and its Android handset makers, such as HTC and Samsung. In fact, Google has put quotes from several Android partners on a dedicated website about the deal, with all quotes acknowledging the acquisition, wishing only the best for the future of the Android platform.
This is a great move for Android as they work to create an “end-to-end” mobile platform, which means creating both the software and hardware. The only other company to do this successfully is Apple, Google/Android’s biggest competitor. This deal will surely heat things up in this ongoing battle between the two mobile platform sharks.
Page also notes on his blog another reason for this acquisition: the patent battle. Over the past couple weeks, Apple’s lawyers have been busy with several suits against many Android handset makers including Samsung and most recently, HTC. As Page writes, “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.” He is certainly correct, as Motorola Mobility owns 14,600 granted patents and 6,700 pending patents.
So what does this mean for other Android handset makers, such as HTC and Samsung, both makers of Android’s flagship phones including the Nexus One and Nexus S? With the next major Android software release, dubbed Ice Cream Sandwich, slated for a fall release, it will be interesting to see what Google will do next in terms of hardware. Page, holding an optimistic view for the future, states “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. I am confident that these great experiences will create huge value for shareholders…I look forward to welcoming Motorolans to our family of Googlers.” This is shaping up to be a great fall season for gadget-lovers.