Earlier today Google announced that it is buying Motorola Mobility holdings, the cell phone business that was split from Motorola in earlier this year, for $12.5 billion. Shares in Motorola Mobility jumped 56 percent after the deal was announced. The deal is Google’s largest-ever acquisition and, says the New York Times, turns the software giant into a “full-fledged cellphone manufacturer” and into a direct competitor with Apple and its iPhone. Motorola currently makes a number of handsets that use Google’s increasingly popular Android mobile operating system.
By acquiring Motorola, Google adds 20,000 employees and over 24,000 patents; Motorola, as TechCrunch points out, owns the patent to the cell phone. Those patents were a major reason Google sought the deal and all the more after last month when it lost out to Apple, Microsoft and a consortium of technology companies in bidding for a $4.5 billion purchase of about 6,000 patents from Nortel Networks, the Canadian telecommunications maker that filed for bankruptcy in 2008. Google afterwards acquired more than 1,000 patents from I.B.M.
Larry Page, Google’s chief executive, said in a blog post that the acquisition will not change Google’s running Android as an open platform. He emphasized that strengthening Google’s patent portfolio “will enable us to better protect Android from anticompetitive threats from Microsoft, Apple and other companies.”
The New York Times Dealbook blog says that the Google-Motorola deal points to a “greater appreciation for patents” and is good news for two “beleaguered” companies, Research in Motion, the manufacturer of the Blackberry, and Nokia. Both companies have their own intellectual property portfolios but have found their devices losing market share. RIM’s smartphones are being pushed to the side by Apple’s iPhone and Android-powered handsets; Nokia, having chosen Microsoft’s Windows Mobile 7 as the operating system for its cellphone, has “cast its lot” with the software giant. Nokia’s shares jumped by 17 percent today as speculation rose that the Finnish mobile phone company might “become a bid target itself,” with Microsoft the likely buyer, says the BBC.
Launched in 2007, Google’s Android operating system is now used in more than 150 million devices made by 39 manufacturers. 35 percent of phones running Android are made by HTC and 29 percent by Motorola — Samsung may be the maker of the “Google phone,” but its market share is 25 percent. Google, that is, has just become the second biggest manufacturer of phones running its Android operating platform. Devices running Android accounted for 43 percent of smartphone sales in the second quarter, notes the New York Times, a significant gain up from last year’s 17 percent.
The deal still faces approval by shareholders and by the Federal Trade Commission, which is already investigating Google’s dominance in a number of areas.
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