Motorola Belongs To Google Now For $12.5 Billion

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(Image: Ilker)
(Image: Ilker)

BUSINESS

  • Google says Motorola purchase will not give it unfair advantage, but will help increase competition
  • Google to report to China over next 5 years on openness of Android software
  • Android software to help Google better compete against Apple iPhone

The largest wireless-equipment deal in a decade is now final, with Google set as the new owner of Motorola Mobility for the purchase price of $12.5 billion.

Google Chief Executive Larry Page made the announcement on the company’s blog: "Motorola is a great American tech company that has driven the mobile revolution, with a track record of over 80 years of innovation, including the creation of the first cell phone. And as a company who made a big, early bet on Android, Motorola has become an incredibly valuable partner to Google." 

The deal was first announced in August 2011, but needed approval from regulatory officials before the sale could close. In February, the US Department of Justice and the European Commission gave their approval.

China’s Ministry of Commerce did not give its approval until this month. The delay occurred because Chinese officials were not convinced the purchase wouldn’t give Google an unfair advantage.

As part of their approval, China requires Google report to an independent Chinese monitor over the next five years to ensure Android software is open and free.

Competition Advantage

Google says its purchase of Motorola does not give it an unfair advantage, and should instead help increase competition.

Many industry analysts, however, speculate Google purchased Motorola for its 17,000 patents. Google plans on operating Motorola as a separate business, and in addition to acquiring patents, Google also inherits all of Motorola’s legal disputes.

Motorola’s Android software will allow Google to better compete against the Apple iPhone, and in addition, Android software is also used by Samsung, HTC and other leading smartphone manufacturers.

For Motorola, the purchase elevates the company’s poor financial situation; Motorola’s market share for smartphones for the first quarter of 2012 was only 2%, and it is involved in several countries in patent infringement lawsuits.

Upon the finalization of the sale, Motorola CEO Sanjay Jha resigned and is replaced by Dennis Woodside, the former vice president of Google's Americas Operations. Jha’s replacement by Woodside has been anticipated since February.

Key Statistics - Global Smartphone Market

  • Over the period 2011–2015, the global smartphone device market is forecast to grow by a CAGR of nearly 25%. (source: TechNavio)
  • In Europe, Android-based smartphones are cheaper than iPhones: last year, out of the total number of smartphones purchased, iPhones only accounted for 4% of the market in Greece and 10% in Portugal, with Android-based phones making up the remainder of total smartphone sales. This trend was triggered by the debt crisis. (source: Global Industry Analysts)
  • By 2017, the smartphone apps market is predicted to reach over $101 billion globally. (source: Global Industry Analysts)

By Melina Druga for
Melina Druga is an American writer and editor. She is the author of Enterprising Women: Practical Advice for First Time Entrepreneurs.

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