Has Google misfired by buying Motorola Mobility?
Google stunned the market by announcing it was buying Motorola Mobility for $12.5 billion. But what is it up to, and should it be up to it? Simon Brew takes a look…
Never let it be said that the IT industry has lost its ability to pull a surprise that the majority simply never saw coming. While one or two analysts had suspected that Google might be going shopping in due course, few had predicted that it would snap up Motorola Mobility, in a deal worth $12.5 billion. But that's precisely what was announced on Monday 15 August, 2011.
The guts of the deal are this. Google is paying the purchase price in cash, offering a premium of 63 per cent over Motorola Mobility's closing share price at the end of last week. It's already said that it intends to leave it running as a separate business, with Larry Page, Google's chief executive, saying that the acquisition will help "supercharge the Android ecosystem".
Where Android was excelling was in being non-partisan.
On paper, then, it's quite straightforward. Google digs into its bottom drawer, pulls out more money than the vast majority of tech companies could raise, and buys a mobile handset company. It does so to give Android a guaranteed foothold in the market, come what may. And you could argue it also allows it some direct quality control.
But already, eyebrows have been raised. The big advantage of Android, to many, was it was the only major mobile operating system that wasn't tied in to a major manufacturer. RIM, after all, keeps its software firmly tied to Blackberry products. Apple and its iOS system are permanent bedfellows, while Windows Phone 7 and Nokia inked a deal earlier this year, which means the former is the main OS used by the latter.
Where Android was excelling was in being non-partisan. As such, it collected a long list of companies keen to use it. HTC, LG, Samsung, Sony Ericsson and Motorola Mobility were amongst the firms that had heavily embraced it. Indeed, it was this broad level of support that had seen Android reach a 48 per cent share of the smartphone market, according to Canalys. It's continuing to grow in popularity, too.
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