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Why is Google Buying Motorola for $12.5 Billion?

It won’t become official until later this year or early 2012, but tech giant Google is now in the process of buying phone-manufacturer Motorola for $12.5 billion.


The deal represents a powerful combination of world-class software and hardware.

The two companies have been working together for some time; Motorola has shown solid support for Google’s Android mobile operating system and has produced smartphones and a tablet computer (the Xoom) based on the Android platform. The deal gives Google its own mobile hardware company, complete with pre-set supply chains and manufacturers.

The deal is more than a welcome piece of news for Motorola, which has been struggling to maintain its position in the handset marketplace. Even though Motorola dominates Android Devices, recently it’s lost roughly half of its share of the market. (Put in terms of dollars, Motorola’s revenues tumbled from $10.6 billion to $4.89 billion during 2010.)

What are Google’s plans for Motorola? Analysts say Google continues to build its business. It has entrenched itself in social media, launching its Facebook-killer (i.e., Google+) and now it’s setting its sites on the mobile space and crosstown rival: Apple.


Google has already declared its intentions to move into Facebook’s social-media territory with Google+. Now it looks as if Google may be preparing for economic battle against the most powerful opponent out there: Apple.

A Big Deal
The deal will transform Motorola Mobility Holdings, Inc., into Google’s in-house manufacturer – and will help turn Google into a giant company that has its own software system and will be able to produce its own hardware…just like Apple.

Google’s massive growth has enabled it to afford the $12.5 billion purchase. However, success has also given Google added exposure. Lately, the search-engine giant has been under the microscope of both the Federal Trade Commission and the U.S. Justice Department, which are investigating Google for anti-trust violations. (It’s generally seen as unlikely, but anti-trust concerns could hinder the Motorola acquisition.)  Although it’s difficult to assess just how the Google-Motorola deal will affect consumers, most industry observers have noted that added competition typically benefits the end-user.

The move also means that like App Development for iPhone, learning App Development for Android devices will be a career that could be very profitable. Internet developers also stand to benefit from the Motorola acquisition, as Google continues to push integrated web and mobile apps.

(UPDATE: 8/16/11)

Google’s growth is currently being studied by the Federal Trade Commission and the U.S. Department of Justice, which is also investigating Google for anti-trust violations. The DoJ will be evaluating the Motorola purchase to see if it breaks any anti-trust laws. If the DoJ determines that, the entire Motorola acquisition might not happen. If the deal should collapse for that reason, it’s reported that Google will have to pay Motorola a $2.5 billion cancellation fee. Most industry experts expect the purchase to occur as planned. 

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posted by Phill Powell in iPhone News & Tips,News Blog and have No Comments

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