Google (NASDAQ:GOOG) will acquire Motorola Mobility (NYSE:MMI) for $12.5 billion, a deal that will meld Google with one of the largest makers of Android hardware.
Google said Motorola will remain a licensee of Android and Android will remain an open source platform. Google also said it will run Motorola Mobility as a separate business, and after the deal closes it will break out Motorola' s results separately.
"I'm really excited about protecting and supporting the Android ecosystem," said Google CEO Larry Page on a conference call with analysts about the deal. "We really believe that Motorola has tremendous opportunity for growth."
Andy Rubin, Google's senior vice president and the head of Android, said that nothing about Android will change and that other Android licensees are enthusiastic about the deal. Google released quotes from top executives from HTC, LG, Samsung and Sony Ericsson expressing support for the Google-Motorola transaction.
Rubin said Google's program to release a lead Nexus device that showcases the newest Android software will continue, and that Motorola will compete to be involved in that program.
The Google-Motorola transaction will need to be approved by regulators in the United States, European Union and other jurisdictions, and the companies said they expect the deal to close by late 2011 or early 2012. Google executives declined to comment on how long it might take for regulators to approve the deal. However, the transaction could be complicated by a Federal Trade Commission investigation into Google's businesses, including Android.
Google executives stressed that the deal is as much about Motorola's patent portfolio as anything else, explaining that Motorola's patent portfolio will bolster Android's position against patent lawsuits.
David Drummond, Google's senior vice president and chief legal officer, declined to comment on how the deal might affect Google's legal strategy. "We think combining with Motorola and having that kind of a patent portfolio to protect the ecosystem is a good thing," he said. Motorola CEO Sanjay Jha pointed out that Motorola has more than 17,000 patents, many of which relate to wireless standards and non-essential wireless patents, as well as 7,500 patent applications in progress.
A number of companies, including Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT), have sued Android licensees for patent infringement.
Google's acquisition of Motorola comes just weeks after it failed to win Nortel Networks' vast patent portfolio in an auction of the Canadian telecommunication company's assets. A coalition of six companies--Apple, EMC Corp., Ericsson (NASDAQ:ERIC), Microsoft, Research In Motion (NASDAQ:RIMM) and Sony--paid $4.5 billion for Nortel's patents (Apple contributed $2.6 billion). However, antitrust officials at the Justice Department are reportedly investigating the sale.
After Google lost out in the Nortel auction, the company was reportedly interested in acquiring wireless technology licensing company InterDigital.
Sound off: Experts weigh in on why Google purchased Motorola
Motorola's Jha open to using Windows Phone OS
Motorola ships 440,000 Xoom tablets, 4.4M smartphones in Q2
Motorola CEO Jha open to software partnership
Motorola's Jha: Software issues drive 70% of smartphone returns
Motorola delays Droid Bionic for Verizon, plans additional features