In a move that poises to shake up the smartphone and home entertainment marketplace, Google announced today that it plans to buy Motorola Mobility for $12.5 billion in cash. The business deal will bolster Google's ongoing competition with Apple to be the paramount smartphone, tablet, and home entertainment electronics company in the world. With the purchase of Motorola Mobility, a company known for its manufacturing of smartphones, tablets, digital cable boxes, and more, Google will now own a direct line of products to feature its Android OS on. This should not only boost Google's smartphone and tablet business, but also reenergize its Google TV product, which has been met with lackluster usage.
While the purchase of Motorola Mobility will certainly enhance the Android's marketshare, it is doing quite fine now at 43% of the global mobile OS marketshare. However, while more smartphones operate under the Android OS than iOS from Apple, Android is currently getting killed in the tablet and TV device market. Today's announced deal should go a long way to evening those numbers out. It will be interesting to see how Apple responds, considering Apple's business model is the poster child for vertical management (i.e. – owning, controlling, and protecting every aspect of its products). Apple will likely have to innovate from within its own R&D division rather than just simply acquire competitors.
A less glamourous, but equally impactful provision of this deal is the purchase of over 17,000 technology patents from Motorola Mobility. Technology patent litigation is blocking much innovation, and unless Congress can get it's act together and reform patent laws (which seems unlikely with the gridlock in Washington at an all-time high), holding these new patents could prove very imporant and lucrative for Google, which is aiming to build revenue streams apart from its advertising business.
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