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Tuesday, 16 August 2011

Google Buys Motorola – further expands empire

Google announced on Monday 15th August that it is to buy Motorola Mobility for $12.5 billion – approximately £7.7million. This means that Google will be paying $40 per share for Motorola Mobility – a massive 63% premium. 

Motorola made the world’s first commercial mobile phone in the 1980s, but hasn’t been as big in recent years as some of its main rivals. It split into two companies earlier this year – Motorola Mobility and Motorola Solutions. Motorola Mobility designs and makes mobile phones, whilst Motorola Solutions deals with other technologies for corporate and governmental clients. 

Commenting on the deal, Larry Page, CEO of Google, 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.”

Google is the developer of the Android software system which is already used by a number of other mobile phone companies, so this move has already left them feeling decidedly worried as to where this leaves them. The BBC’s Technology Correspondent Rory Cellan-Jones described the move as “a real wake up call to the rest of the mobile phone industry”. 

By Monday evening there was already speculation that one of the key beneficiaries of the deal would be the Nokia / Microsoft partnership, as companies currently using Android might choose to look elsewhere now. Fuelled by an announcement from the Finnish mobile phone company, analysts started predicting that other mobile phone companies that already have Google’s Android system on their phones may now feel uncomfortable and uncertain that they would not get the same access to Android on their handsets as Motorola, despite reassurances issued by Google on Monday afternoon.  Google was quick to publish messages of support for the deal from Samsung, Sony Ericsson, HTC and LTG, although, as many others have commented, these statements sounded rather lukewarm to say the least. 

There was also speculation that the deal was more about patents than anything else, with Motorola having 17,000 patents and thousands more pending. However, other experts also noted that until now Google only made software in the mobile phone market, and with this move would now be producing the hardware as well as the software, producing not just Android software, but the mobile phones for it to go on as well.

Commenting on the deal, David Clarke, Director of DBS Telecoms said: “Whilst the impact of this deal is still unclear, it is becoming obvious that four giants are emerging in the mobile phone industry – Apple – with their own computers, tablets, mobile phones, software, stores etc., Microsoft/Nokia, Google/Motorola and Blackberry. It is hardly surprising with the rise of the smart phone that Google and Microsoft are wanting to get in on the act – every new set of statistics released shows that more and more people are accessing the internet and emails through their smart phones rather than through traditional computers now, and that trend is only going to continue.”

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