Google lays down the gauntlet

In an unexpected but incredibly shrewd move, search giant engine Google has acquired Motorola’s mobile phone business for a whopping $12.5b-billion in a watershed deal that has brought Google right back into the heart of the Smartphone war.

Announcing the deal on the company’s official blog, CEO Larry Page detailed the company’s phenomenal success with its Android operating system, noting that more than 150 million Android devices have been activated worldwide, with more than 550 000 devices activated each day. Page said that Google wanted to “supercharge the Android ecosystem” and has decided that Motorola is the best company to help the company do just that. Motorola has 80 years of innovation in communications, introducing the world’s first portable mobile phone over 30 years ago. The company was also one of the founding members of the Open Handset Alliance, and was one of the first smartphone vendors to associate a definitive brand with the Android ecosystem via its Droid smartphones.

Page commented: “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. “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.”

immedia CEO Anice Hassim describes the transaction as a daring and uncharacteristic move on Google’s part and says it certainly means game on in the Smartphone war currently playing out on the global stage. He adds, however, that Google simply had to do something that would strengthen their patent portfolio and allow them to become a first tier integrated vendor like Apple and HP and Microsoft so even at $12-billion Motorola is cheap at the price. Hassim says Google has done this for a couple of reasons. “Firstly, it allows the company to embed itself in the handset business especially when one considers the fact that Android now has approximately half of the global smartphone market. Another key factor is also one of Motorola’s greatest strengths, namely its incredibly strong patent portfolio which means that with the acquisition Google gets 17 000 patents, three times that of Nortel, with 7 500 pending.

“Motorola has very deep IP in the mobile space so by buying it; Google is effectively defending its patent core position and its Android operating system which is obviously under threat. This is especially in light of the fact that Google lost out to a high bid of $4.5-billion by a group that included Apple Inc, Microsoft, Sony Corp, Ericsson AB and EMC Corp at the Nortel patent auction last month.” Hassim says it also gives Google far greater control of its offering and command of the marketplace as until now it hasn’t had a mechanism with which to reach customer. By acquiring Motorola, its 53 000 employees (Source: CNN 2010) and ability to manufacture its own phones and the global understanding that brings with it, allows Google to reach the market far quicker than licensing out Android.

So despite the fact that analysts and industry experts have long said that Google needs to get into the handset business; nobody could have predicted this watershed turn of events. Google has upped its game and is on a collision course with Apple and we can’t wait to see how it pans out.

(Sources: thenextweb.com & thestar.com)