MOUNTAIN VIEW, Calif. (The Blaze/AP) — Google is buying cell phone maker Motorola Mobility for $12.5 billion in cash in what is by far the company's biggest acquisition to date.
Google Inc. will pay $40.00 per share, a 63 percent premium to Motorola's closing price on Friday. The deal gives Google direct control over the maker of many of its Android phones, which Google CEO Larry Page says will "supercharge the entire Android ecosystem."
This deal has experts talking about this acquisition as a move to protect itself against patent wars from competitors, namely Apple.
CNET has more:
In his blog post explaining the deal, Google's CEO Larry Page said that Motorola's strong patent holdings were a major consideration in the deal.
"We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to "protect competition and innovation in the open source software community" and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google's patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies."
Since the Android operating system was first developed, Google's strategy has been to make the open-source software available to any hardware maker for free. The idea was to compete against Apple's closed iOS platform by allowing hardware makers such as Motorola, Samsung and HTC to leave much of the software innovation to Google, while they could focus on innovating around hardware. Meanwhile it could also battle against Microsoft, which asks its licensees to pay a fee for using its software.
Success from these techniques drew the attention from competitors and resulted in patent purchases that would force a $15 licensing fee on Google for every Android device. CNET quotes Google's Chief Legal Officer:
"A smartphone might involve as many as 250,000 (largely questionable) patent claims, and our competitors want to impose a "tax" for these dubious patents that makes Android devices more expensive for consumers," said David Drummond, Google's chief legal officer. "They want to make it harder for manufacturers to sell Android devices. Instead of competing by building new features or devices, they are fighting through litigation."
Information Week reported that this deal would bring as many as 25,00 patents to the Android.
With a stronger patent portfolio, Google will have more ammunition for counter-claims. That threat is likely to result in more favorable settlements of existing patent claims and to deter future lawsuits, at least from companies that actually ship products--non-practicing entities that sue for patent infringement, like Lodsys, generally don't fear counter-lawsuits because they don't offer products that can be blocked with an injunction.
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"This gives Google a pretty strong portfolio that could be useful in a defensive way," said [Ed Black, CEO of the Computer & Communications Industry Association to CNET in a phone interview]. "At the same time, the deal shows that companies have to make huge investments to compete. It reveals the system is broken."
This video from Independent Television News sums it up:
Fox News took the announcment of Google's Motorola acquisition and looks into how it's becoming more and more evident that Apple and Google will continue on as the front-running mobile device providers as others like Blackberry and Nokia quickly fall behind.
Apple plans to build 26 million iPhone 5s in the second half of 2011, reports suggest, and will ship nearly 100 million phones this year. Yet over 5 million people worldwide bought Samsung's Google-powered flagship phone in the first 85 days it was on the market -- that's one every 1.5 seconds. According to research firm Gartner, Android phones made up nearly 44 percent of sales in the second quarter of 2011.
Fox News begs the question: Are you Apple or Google?