Google recently purchased Motorola’s Mobility segment for a cool $12.5 billion. The deal is being called Google’s insurance policy against legal attacks from rivals such as Apple, Inc. TechCrunch points out that this deal adds 17,000 patents and 7,000 pending patents to Googles’ portfolio. The interesting news will now be to see how far Google will take Motorola Mobility considering the $12.5 billion dollar deal is 1/3 of Google’s cash in hand – not meaning to suggest in any way that the deal was all cash.
Motorola Mobility is responsible for the cell phone and TV Set-top ox business and Google is not backing down by offering a 63% premium to gain access to Motorola’s patent library. Google is essentially guarding itself against the Android system going through an intellectual property battle. It could be that perhaps Google wants to be more like Apple – owning the ecosystem around its Android platform but if not, the patent warfare might get heated up. Google also claims that the deal won’t harm Googles’ relationship with other handset manufacturers but that doesn’t seem likely at all.
The good news is for Blackberry (Research in Motion) and Nokia that they have now become targets for takeover as well, shooting their share values up. Google has now acquired Motorola to not only create the hardware that users like but to couple it with Google’s popular Android software. In the long run it would have been difficult for Google to compete with someone like Apple that is able to marry the hardware and software as easily as Apple does with the iPhone and Googles’ new acquisition will make way for them to stand head to head with Apple.
On the other hand, we may also see GoogleTV being pushed to Motorola’s set-top boxes and that could be a nightmare for some cable and satellite companies. Either way, I think the deal is only fair in terms of Google now being able to compete with Motorola – what this will mean for the consumer (aside from a better phone) is to be determined as time passes on.