Google Gobbles Motorola Mobility

In a deal that has surprised many, Google has acquired Motorola Mobility in a $12.5 billion deal. The acquisition should place Google in position to become a large player in the mobile marketplace. 

LOS ANGELES, CA (Catholic Online) - Google, which has been competing with Apple, Blackberry, and Microsoft for mobile dominance has been wary of patent lawsuits brought by its competition. The acquisition of Motorola, which invented the mobile phone over 30 years ago, should help prevent such suits because the company has held on to 17,000 patents along with 7,400 patents pending. This move should protect the Android operating system as it becomes the world's most widely used smartphone operating system.
 
This is not the first time Google has acted to protect itself from patent lawsuits through acquisition. Recently, Google attempted to buy a portfolio from Nortel with a bevy of key telecommunications patents for $1 billion, but was beaten out by Apple and Microsoft who together bid $4.5 billion.

Buying patents is an important business strategy in the telecommunications market. Patent lawsuits can cost millions to litigate and often take years, slowing down or even stopping a company's efforts to promote a new product. At the minimum it can shave millions off of sales profits, so such lawsuits are a common practice among competitors. Occasionally the mere threat of lawsuits is sufficient to discourage a competitor from developing a product. Currently, Google is involved in a high-stakes patent battle with Oracle which claims that Google infringed on some of their Java patents.
 
Going forward

Google CEP Larry Page admitted that Motorola is outside the core competency of Google and explained that it will be run as a separate company. Motorola will continue to license Android from Google and pay it for the core applications that come with the system. Taking that separation a step further, Motorola will also have to bid to become the maker of the Nexus device. Google said that despite the acquisition, Motorola will not automatically win the rights to produce the phone.

This will hopefully assuage some of the concern that Google's current handset manufacturing partners may have over the acquisition. And, on the contrary, some of the partners have actually defended Google's move. J.K. Shin, president of Samsung's mobile division told reporters, "We welcome today's news, which demonstrates Google's deep commitment to defending Android, its partners, and the ecosystem."

Google is buying Motorola for $40 a share, and it's paying the entire 12.5 billion in cash. This is the largest Google has ever paid for an acquisition.

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