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Google and Motorola Mobility announced today that Google will buy handset maker Motorola Mobility for $12.5 billion in cash. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

Google will no longer be just an operating system provider. It will now compete directly with Apple as well as the various other Android handset makers with a complete end-to-end platform.

Larry Page, CEO of Google, said in a blog post:

“Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”

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.

We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. 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.

Nielsen reports a 39-percent Android platform market share across the major smartphone manufacturers, while Apple’s iPhone operating system claims a 28 percent stake.

Activist investor Carl Icahn, who is the company’s largest shareholder, had urged Motorola Mobility to explore options for its patent portfolio in the wake of the Nortel deal that attracted multiple bidders, reports the Wall Street Journal.

In a blog posting Aug. 3, Google accused Apple, Microsoft and Oracle of using patents to wage a “hostile, organized campaign” against Android. To help fight back, Google hired Suzanne Michel, a former Federal Trade Commission deputy director and one of the agency’s top intellectual property officials. Michel was the chief writer of a patent report the FTC issued in March.

Perhaps the integrated Apple/IOS platform, Nokia/Windows Mobile OS platform, RIM/BlackberryOS and now the Motorola/Android OS platform could cause some device manufacturers to adopt the orphaned Meego operating system, championed largely by Intel.

A new app storefront forecast by Strategy Analytics says the app economy is strong and getting stronger. Paid downloads are expected to drive nearly $2 billion per quarter by the end of 2012. They predict the Android Market will overtake the Apple App Store in quarterly volume by the end of 2012. Android will be helped with additional assistance from third party distribution outlets such as the Amazon App Store, GetJar, Nook App Store and others.

This would be Google’s largest-ever acquisition (by far). To date, it’s largest deal was for online ad company DoubleClick ($3.1 billion), followed by the 2006 purchase of YouTube ($1.65 billion). Google also was part of an investor group that purchased a 22% stake in Clearwire for $3.2 billion in late 2008. Google has some $39 billion in cash on hand.

Imagine the possibilities if it also acquires Sprint, says Forbes, which would only cost about $10 billion more. Unlimited voice, video and data, including WiFi, 4G, and state-of-the art Android smartphones and tablets. No separate, expensive mobile voice plans.

As Dan Lyons put;

Google never cared about the Nortel patents. It just wanted to drive up the price so that AppleSoft (those happy new bedmates) would overpay. Today, with the Motorola deal, Google picks up nearly three times as many patents as AppleSoft got from Novell and Nortel. More important, Google just raised the stakes in a huge way for anyone who wants to stay in the smartphone market. As for those crazy bids in the Nortel auction — that was just a way to leave a little “fuck you” in the paperwork for Google’s pals in Redmond and Cupertino to look back upon. That move is pure Larry Page. This is a smart, hyper-competitive guy with a mean streak and a nasty sense of humor.


The Motorola transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the US, the European Union and other jurisdictions, and the approval of Motorola Mobility’s stockholders. The transaction is expected to close by the end of 2011 or early 2012

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