Google to Acquire Motorola

In a move that is sure to shake up the mobile phone market, Google today announced plans to acquire Motorola Mobility for $12.5 billion. The deal is by far Google’s largest acquisition to date.

The deal brings to Google Motorola's portfolio of mobile devices and tablets, wireless accessories, end-to-end video and data delivery, and management solutions, including set-top boxes and data-access devices. The deal is expected to dramatically alter the smartphone landscape, considering that Google heads the development of the Android mobile operating system.

"The smartphone and tablet sectors are outrageously competitive, and eking out a sizeable profit compared to Apple is going to be a challenge. Motorola Mobility was facing an uphill battle in a war that pitted it against one Goliath (Apple) and numerous Davids (HTC, LG, Nokia, Samsung)," said Steve Hilton, principal analyst at Analysis Mason.

Google, Hilton notes, "didn't need to own a handset manufacturer to be successful. It had already created pull-through demand by building a strong application market and end-user demand."

The real benefit for Google comes from "owning a credible manufacturer where you can begin to incubate, pre-test, and implement new mobile-centric solutions," he adds. "Google will now own a hardware vendor where its OS and applications can, in theory, be leading-edge."

Billionaire investor Carl Icahn, who owns a large chunk of Motorola's stock and had been pushing the company to sell its patents for some time, likewise, called the move a good one."“This is a great outcome for all shareholders of Motorola Mobility, especially in light of today’s markets," he said in a statement.

Motorola reportedly already holds 17,000 patents and another 7,000 patents are pending.