Google buys Motorola Mobility to strengthen Android

[Rogue Trader]

Google looks to 'supercharge' Android with Motorola Mobility
Google to acquire US mobile company's smartphone business to 'supercharge the Android ecosystem'

Google is to buy Motorola Mobility – maker of the Motorola Xoom tablet – for $12.5bn. Photograph: Yoshikazu Tsuno/AFP/Getty Images

Google is to acquire Motorola Mobility, the US mobile company's smartphone business, in a $12.5bn (£7.6bn) cash deal.

The takeover will boost the rise of Google's Android software in the nascent smartphone market. The $40-a-share deal – which is Google's biggest acquisition to date – is a 63% premium on Motorola Mobility's closing price on the New York Stock Exchange on Friday.

Larry Page, Google chief executive, said: "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."

Sanjay Jha, chief executive of Motorola Mobility, added: "This transaction offers significant value for Motorola Mobility's stockholders and provides compelling new opportunities for our employees, customers, and partners around the world.

"We have shared a productive partnership with Google to advance the Android platform, and now through this combination we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home businesses."

The deal represents Google's biggest challenge yet to Apple, which has led the way in the smartphone and tablet markets with the iPhone and iPad.

Other manufacturers, including Samsung and HTC, will be free to release phones using Google's Android software. Google will run Motorola Mobility as a separate business.

The takeover also pits Google, which has traditionally avoided involvement in hardware, against the manufacturing giant Nokia. The move comes just six months after the Finnish phone maker signed a strategic deal with Microsoft in an effort to rebuild its ailing fortunes.

Motorola was the first mobile maker to partner with Google and release phones based on its Android operating system.

Motorola spun off Mobility as a separate business in January this year. The manufacturing division primarily produces smartphones, such as the Motorola Droid and the Defy, but also makes tablet computers and digital set-top boxes.

Analysts have long predicted that half of the world's smartphones will be using Android software by the end of 2012, as manufacturers have rushed to adopt Google's operating system rather than develop their own.
The deal is subject to US regulatory approval, which could prove a larger hurdle than usual given that Google's Android division is already being probed by anti-trust investigators. The companies said they expect the takeover to be completed in late 2011 or early 2012.

Andy Rubin, senior vice president of mobile at Google, said: "We expect that this combination will enable us to break new ground for the Android ecosystem.

"However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices."

In a blogpost announcing the acquisition, Page said the deal would allow Google to "better protect" Android from "anti-competitive threats" over patents from Microsoft, Apple and other companies.
The highly competitive smartphone market has escalated into a bitterly fought patents war between the major manufacturers and software giants. Microsoft and Apple are suing Motorola and Google over a string of alleged patent infringements relating to Android.

Monday's deal means that Google now owns Motorola Mobility's swathe of patents – thought to total about 17,000 – and strengthen its position in the market. However, those patents failed to deter the ongoing lawsuits from Microsoft and Apple.

Page said: "In 2008, Motorola bet big on Android as the sole operating system across all of its smartphone devices. It was a smart bet and we're thrilled at the success they've achieved so far. We believe that their mobile business is on an upward trajectory and poised for explosive growth."

Motorola Mobility shares soared 60% to $39.20 – just below Google's offer price – in early trading on the New York Stock Exchange.

 

[johnny333]

HTC & Samsung must now be worried about the competition from Motorola aka Google

 

[Rogue Trader]

Shouldn't matter for them.. Other manufacturers like HTC can always bet on 2 horses and make Windows phones as well..

 

[johnny333]

Shouldn't matter for them.. Other manufacturers like HTC can always bet on 2 horses and make Windows phones as well..

The fact that they now have to take "precautions" is going to cost them $$$

Will give microsoft & HP some time to polish their phone os.

 

[scroobal]

I think we are looking at a game changer. From algorithms to devices. Motorola spent millions in R&D and had labs in obscure cities manned with the best grads in science and technology. They built a warehouse full of patents and I understand at least 5 times more then Apple. Something than happened in circa 2005. They never got it right when it came to design or marketing. Let's see where it goes from here.

 

[Rogue Trader]

yup.. patents galore....

AUGUST 15, 2011, 3:28 P.M. ET
Google Aims To Play Patent Catch-Up With Motorola Mobility Deal
--Google purchase would lend it about 17,000 new patents
--Motorola has been more active in patenting than Google
--Google cites need for protection from Microsoft, Apple

By John Letzing Of DOW JONES NEWSWIRES SAN FRANCISCO (Dow Jones)--Google Inc.'s (GOOG) planned acquisition of Motorola Mobility Holdings Inc. (MMI) will provide it with a trove of intellectual property that could help protect it against a weakness in its open-source software strategy: A lack of emphasis on locking down patents.

On Monday, Google said it would pay $12.5 billion in cash to buy Motorola, which makes a host of handsets that run the search giant's Android operating system. Android, which is also used by other manufacturers, is the most popular smartphone operating system in the world with 43% of the market, according to Gartner Inc.

Android is an example of open-source software that is designed to allow outside engineers to tinker with the way it works. While that makes Android highly customizable--companies using the software can optimize it for their devices--it also has left the operating system vulnerable to intellectual-property lawsuits.

Motorola's patents will help Google address that weakness, which already has prompted a lawsuit by database giant Oracle Corp. (ORCL). Motorola, of Libertyville, Ill., holds or has applied for a total of 24,500 patents.

The proposed acquisition comes as patent protection emerges as a key area of corporate strategy. Technology companies are amassing intellectual-property arsenals to both defend against litigation and as a weapon for countersuits. Google's partners, including Motorola, have been popular targets of lawsuits, including actions by Apple Inc. (AAPL) and Microsoft Corp. (MSFT).

"Google has a very small patent portfolio compared to its peers, said David Mixon, a patent attorney at Bradley Arant Boult Cummings LLP, noting that is an outgrowth of the company's participation in the open-source movement. "They tended to neglect development of their patent portfolio."

Motorola could help change that dynamic.

The company, which split from Motorola Inc. earlier this year, has outpaced Google in terms of patent activity. In the five years ending in December 2010, Motorola had roughly 4,300 pre-grant applications for U.S. patents, according to IFI Claims Patent Services. That is more than four times the number of pre-grant applications for Google in the same period.

In the year through July 26, Motorola has been awarded 174 U.S. patents, compared to 168 for Google, according to IFI Claims Patent Services.

Motorola's patents include an "ornamental design" for a device storage case, granted last month, and a method for maintaining the flow of data to devices from data centers, granted in June.

Motorola's intellectual-property strength has been noted by investor Carl Icahn. Last month, Icahn disclosed in a regulatory filing that he had urged Motorola Mobility to explore options for its valuable patent portfolio.

Apple and Microsoft both have sued Motorola as a proxy for Google, claiming that Motorola devices running on Android violate their patents. Google Chief Executive Larry Page said in a blog post that the acquisition would help Google protect Android from such litigation.

"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," Page said.

A Google spokesman declined to provide further comment.

The patent trove also may help Google protect itself from direct litigation.

Last August, Oracle sued Google, claiming that Android infringed on patents and copyrights associated with the database company's Java software.

Earlier this month, Oracle sought unsuccessfully to have Motorola Mobility produce a witness for deposition in that case, which is expected to come to trial in October.

An Oracle spokeswoman declined to comment.

-By John Letzing, Dow Jones Newswires; 415-765-8230; [email protected]

 

[Rogue Trader]

Investor sues Motorola Mobility, Google over $12.5-billion deal
August 18, 2011 | 8:47 am

A Motorola Mobility shareholder has reportedly filed a lawsuit against the company and Sanjay Jha, its CEO, alleging that the smartphone and tablet maker undervalued the firm when agreeing to sell it to Google for $12.5 billion.

That purchase price, which Google and Motorola Mobility announced publicly on Monday, is a 63% premium over Motorola Mobility shares' closing price on Friday and also the largest amount that Google has ever agreed to pay in an acquisition. The deal has been approved by Google and Motorola's boards of directors.

John W. Keating, the investor who filed the suit on Tuesday in a Chicago court, also listed Google and Motorola Mobility's board as defendants, according to a report on the suit from Bloomberg.

"The offered consideration does not compensate shareholders for the company's intrinsic value and stand-alone alternatives going forward, nor does it compensate shareholders for the company's value as a strategic asset for Google,” Bloomberg reported Keating stated in the suit.

Keating also said in his complaint that he is seeking class-action status and a court order that would block the completion of the sale, the report said.

Google's agreement to takeover Motorola Mobility is fueled by a need for mobile technology patentsand is an attempt to have a more closely aligned hardware partner, one that would help Google and its Android mobile OS build premium devices to compete with Apple's iPhone.

The deal still needs to be approved by the Federal Trade Commission and the Department of Justice because of antitrust concerns, but if the deal is completed, Google will own about 17,000 patents currently belonging to Motorola Mobility.

Google has said it would run Motorola as an autonomous company, and makers of Android phones such as HTC, LG, Samsung and Sony have come out in support of the move. But there is also talk of the purchase possibly pushing hardware makers to give another look at competing mobile operating systems such as Microsoft's Windows Phone and HP's WebOS.

Officials at Google and Motorola were unavailable for comment on the suit as of Thursday morning.​