[Bluengel180]

Crazy news just in—Google is acquiring the handset division of Motorola, Motorola Mobility, for $12.5 billion. This means Google could soon officially in the hardware business.
Could, because the deal has to pass regulatory scrutiny from governments around the world plus the eyeballs of Motorola's shareholders. But should that all clear, this is a big, big deal. From the press release (below), "the acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business." HTC, Sony Ericsson, Samsung, LG and the other Android manufacturers must be quaking in their boots today. That said, despite offering 32 phones—21 of which have Android baked in—Nasdaq pegged Motorola with a paltry 3% market share as of the beginning of this year. Not exactly a commanding force. Then again, that was before Google was at the reins.

Some additional thoughts:

• Google putting out its own hardware makes things super awkward for Google's Android partners, and could be the best thing that ever happened to Windows Phone. Samsung, HTC, et al, are going to need another avenue of attack, since Motorola branded products are going to theoretically have a major advantage, even if Google insists they're going to have to compete like every other phonemaker.

• What does this mean for Google's retail skills? They totally boned the original Nexus launch. On the one hand, now they've got Motorola's supply chain and competencies. On the other hand, Motorola lately hasn't been all that amazing (3 percent share, and that's with the most visible Android brand name on the market).

• Motorola's got something like 21 Android handsets. Does that mean we're suddenly going to have two dozen phones running stock Android? That would be kind of incredible. At the same time, other OEMs are probably going to be even more aggressive with their skins so that they can "differentiate." In an ideal world, they're forced to find a way to actually improve the Android experience. In reality, they're probably just going to screw it up more.

[Businesswire and TNW]

Update: A blog post on Google's official blog states that part of the attraction for Google was Motorola's generous (17,000) handful of patents, with CEO Larry Page writing:

"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."

Just in case you had little doubt in your mind, patents are the new basketball cards.

MOUNTAIN VIEW, Calif. & LIBERTYVILLE, Ill., Aug 15, 2011 (BUSINESS WIRE) — Google Inc. GOOG -3.15% and Motorola Mobility Holdings, Inc. MMI +60.36% today announced that they have entered into a definitive agreement under which Google will acquire Motorola Mobility for $40.00 per share in cash, or a total of about $12.5 billion, a premium of 63% to the closing price of Motorola Mobility shares on Friday, August 12, 2011. The transaction was unanimously approved by the boards of directors of both companies.

The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

Larry Page, CEO of Google, said, "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. I look forward to welcoming Motorolans to our family of Googlers."

Sanjay Jha, CEO of Motorola Mobility, said, "This transaction offers significant value for Motorola Mobility's stockholders and provides compelling new opportunities for our employees, customers, and partners around the world. We have shared a productive partnership with Google to advance the Android platform, and now through this combination we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home businesses."

Andy Rubin, Senior Vice President of Mobile at Google, said, "We expect that this combination will enable us to break new ground for the Android ecosystem. However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices."

The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the US, the European Union and other jurisdictions, and the approval of Motorola Mobility's stockholders. The transaction is expected to close by the end of 2011 or early 2012.

Google Is Buying Motorola

[joe1980]

I guess this should have already been in Google's plan since the time they launched the Nexus. Might be they wanted to have a feeling of what the market would hold for them with Handsets being branded Google and I guess they liked it and hence taking this huge huge step. I hope everything good works out for Google and now we can see the competition really heating up among the handset manufacturers.

Good time for us consumers!

[deep_bang]

Very interesting development indeed.

Is Google ready to take on Apple? Although Andriod has everything that Apple has, it never managed to 'click' as the Iphone did. So, may be this is a step in that direction to make the hardware + software combination perfect and take the experience a notch above.

Other partners will be forced to settle for the next place as Motorola always will be 1 step ahead.

However, it would be challenging to change the culture of Motorola to that of Google. Just my thoughts - feel free to dispute!

[Saanil]

What a deal! I think its premature to make any predictions regarding this deal - especially in the mobile market which is one of the most fastest evolving market. It will be interesting to see how others react to this. Gear up Apple - Google is coming!

[kaks15]

Originally Posted by deep_bang

Very interesting development indeed.

Is Google ready to take on Apple? Although Andriod has everything that Apple has, it never managed to 'click' as the Iphone did. So, may be this is a step in that direction to make the hardware + software combination perfect and take the experience a notch above.

Other partners will be forced to settle for the next place as Motorola always will be 1 step ahead.

However, it would be challenging to change the culture of Motorola to that of Google. Just my thoughts - feel free to dispute!

Just found this article that adds to your point, a very interesting read

Google buying Motorola Mobility should build a better Android - Chicago Sun-Times

People who own iPhones almost never switch to anything else. People who own Android phones by and large were looking for any phone with these features available from this carrier at this price. They’re no more aware of the technology that powers it, nor do they feel any inclinations to specifically go back for more of the same after they accidentally run their phone through the laundry, than I am of the logo on my toaster oven.

The only way to firmly define Google as a top-tier maker of a mobile OS, as opposed to just another company that cranks out toasters, is to take control over Android and enforce the sort of vision which allows the platform to move forward. Sometimes, you can’t let a market keep building faster and faster horses. You have to start selling cars.

[rajanmehta]

Wall Street Journal is reporting that Motorola has put a $2.5 billion Reverse Termination Fee on Google. >> Google-Motorola Deal: Signs of Regulatory Worries - Deal Journal - WSJ

In English, that means if Google can’t push the acquisition across the finish line — including, presumably, because the government won’t allow the deal to happen — Google would owe Motorola $2.5 billion. That’s an unusually large 20% fee. Typically, termination fees tend to be roughly 3% of the value of a deal or higher.

[prateekm]

Though OT, heard this joke tweeted by someone:

Google's purchase of Motorola, translated "You want to sue us for patent violation, Apple? We're buying the company that invented the mobile"

[Newpunter]

I'm wondering how much this will affect Android's OEM partners like HTC, Samsung and SE , who have bet heavily on Android and are the main reason for Android surpassing iOS.
In one way, this is a good thing for the OEMs as Motorola was gearing up to sue the Android OEMs inorder to monetize it's patent portfolio and reduce the losses that it has been incurring. With Motorola being snapped up by Google, the OEMs would feel safer from the threat of getting sued by Motorola.
On the other hand, i think the OEMs would start looking at alternatives like Windows Phone, Meego etc more seriously instead of putting all their eggs in the Android basket.

[Spitfire]

A brilliant move isn't it. Somebody at Google knows his job.

Once Nokia was taken out of the way. It is now consolidating the hardware part. I think this new innings for Motorola will be well crafted.

Looking forward to some serious competition for Apple.

[SilentEngine]

Good move!

Google has to get more hands-on than just build the OS and let others build the phones using their OS. This will address some part of that problem.

However the overall android ecosystem has still some way to go to reach same level as iOS ecosystem.

[HammerHead]

Good for Google as well as Motorola
I hope under Google MOTO will see good days ahead.

Long back there were reports that Videocon Group will buy Motorola handset division. Thank god it did not happen!!

[athul_S]

Well...There goes my plan to buy an android this year

I have a feeling that i'd probably wait for the first GOTOROLA

[Sprucegoose]

This is a brilliant move by Google.
1> I'm sure Apple are infringing atleast some of Motorola's Patents.
That way with Apple's Anti-competitive patent infringement ongoing campaign, Android can fight back as a group rather than as individuals

2> One major problem [from a dev pov] with android is that it can run on a multitude of different platforms. i'm not talking about a Galaxy S2 and a Sensation, but i'm talking about the different SOC chips. TI OMAP, Samsung Exynos and all the others. If google does standardise the Hardware [again i'm only talking about the internal hardware], a lot more effort can be devoted to making one mother of an OS rather than making one OS work on several different platforms.

3> Google can give Apple a taste of it's own medicine.

4> Motorola does make very good hardware and they have excellent quality control. It's just that those twerps would lock their bootloaders. Hopefully google will unlock them, then Motorola phones will be untouchable.

[Newpunter]

I have a feeling that Google is not very interested in the handset division but is more interested in the patents that motorola holds to help them in the patent wars against Apple and Microsoft. Google recently tried to get hold of the patents of Novell and Nortel and this move also seems to be in this direction.
I think Google might not provide special privileges to Motorola in the handset business as it might upset it's partners Samsung and HTC which are currently the top Android OEMs.

[clevermax]

Originally Posted by deep_bang

Is Google ready to take on Apple? Although Andriod has everything that Apple has, it never managed to 'click' as the Iphone did. So, may be this is a step in that direction to make the hardware + software combination perfect and take the experience a notch above.

Android has already 'clicked' where iPhone is still an unknown for many - look how many people around us are using budget Androids. They would never have thought about buying an expensive iPhone though.