Google Shakes Up the Smartphone Market by Buying Motorola Mobility

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Google is buying Motorola Mobility, the maker of some of the Most Popular Smartphones running the Android OS, including the Droid line. Motorola Mobility will be run as a separate company which will keep its own name.

GoogleGoogle emphasized that it intends to keep Android an open operating system, and not become like Apple and RIM, which develop a proprietary OS only for their own handsets. Andy Rubin, Senior Vice President of Mobile at Google, said, “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.”

Nevertheless, this deal will surely cause concern at companies like HTC and Samsung which also use the Android OS on their most popular products. It raises the possibility that Google could start favoring the Droid line, giving Motorola engineers access to the software ahead of its rivals, or making special modifications to the operating system specially for this smartphone maker.  

Details of the Deal
Google will acquire Motorola Mobility for $40 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,. The transaction was unanimously approved by the boards of directors of both companies.

The deal is subject to usual problems that crop up when one very large company buys another, including getting the required 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.

Motorola Mobility was split off several years ago because it was unprofitable. At the time, the company was struggling to find a replacement for the very popular RAZR line of feature phones. Since then, it has become a significant player in the Android smartphone market, making a number of widely used smartphones as well as the XOOM tablet.

 

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