Google’s £7.6bn intended purchase of Motorola Mobility has caused much debate over the past week, with analysts discussing the pros and cons of this radical move. Google’s main reason is said to be strategic, as it would strengthen their product portfolio by gaining a significant amount of patents. But Google are effectively paying 63% over Motorola Mobility’s share value, so they must be pretty sure it’s an investment worth making.
Motorola Mobility was formerly known as the mobile devices division of Motorola Inc, until January of this year, and is based in a suburb of Chicago in the US. MM is now a separate entity in its own right, and comprises the Mobile Devices business, which produces smartphones, and the Home Business, which produces set top boxes and video solutions. Motorola have been seeing a decline in global mobile market share for the past few years, with rivals like Samsung and LG threatening their position. So why do Google see this as such a worthwhile deal?
Part of the answer is due to the ongoing disputes involving both Android and Motorola, between big companies, like Microsoft and Apple. Google’s Android operating system has recently come under fire in industry wide patent battles, as Apple as Microsoft have taken Android device makers like HTC, Samsung and Motorola to court. By acquiring their Mobility arm, Google will have bought better protection for their patent portfolio and allow it to more freely offer its Android OS.
In summary, Motolora’s patent and intellectual property portfolio is huge and historically rich in the mobile arena, with Google’s paltry in comparison. This would have left Google even more open to attack from rivals. By acquiring these mobile patents, plus the home division of Motorola Mobility, Google can create a complete converged ecosystem of media devices within which to sell advertising and protect their own interests.
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