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Google announced today they have purchased Motorola Mobility for $12.5 billion (£7.7 billion) according to reports (Source: BBC). If approved by regulators, this will be their biggest purchase to date and represents a significant step forward for Google who aren’t shy of splashing the cash on acquisitions.
Their latest financial figures indicate they’re in a position to make purchases, either to beat competition or to evolve their own services [See: Despite Spending Big, Google Posts Huge Q2 Profits]. This latest purchase is a definite case of doing both those things, as they turn their attentions to a mobile market which, despite the growth of Android, is still dominated by Apple.
Some quarters have raised the issue of Google paying an over inflated price. Motorola Mobility’s share price soared to a whopping £40 per share or $12.5 billion in total, which is a massive 63% over the share price they recorded on Friday. However it isn’t as if Google couldn’t afford to make the purchase, and for them it’s what the deal represents going forward rather than this initial payment.
For example, it will give them the perfect opportunity to dent the mobile share market, currently occupied by their biggest rival Apple as well as Microsoft, Nokia and the recently faltering RIM who make BlackBerry devices.
However Google are no strangers to this market as their Android operating system actually makes up about 40% of the market, compared to Apple iOS’s 26.6% and RIM’s 23.4%. The Android system represents a third-party deal with hardware providers such as HTC, Samsung and others. It’s the dominant operating system in the US, but Google clearly want more, and want to develop the Android platform whilst designing their own hardware.
For Motorola Mobility, the deal “offers significant value for [their] stockholders and provides compelling new opportunities for our employees, customers, and partners around the world” according to their CEO Sanjay Jha. For Google their CEO Larry Page said that “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.”
In an industry that is highly competitive, it’s a bold move from Google, but nonetheless it’s a clear message to their rivals and perhaps Apple most of all. It looks like they will aim to provide mobile systems with a tight integration of Android based software and new Motorola Mobility hardware.
Whilst this is an exciting move for both Motorola Mobility and Google, it is also great for consumers too; already there is talk of joint Google Chromebook and mobile devices. That is assuming the deal is approved by regulators, in which case Google believe it could be completed by late this year or early 2012.
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