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August 16, 2011

The Deal of The Decade :Motorola Gets Googled: Infographic

Google made a $12.5 billion bet on Monday that its future of big Internet companies lies in mobile computing, and moved aggressively to take on its arch rival Apple in the mobile markets.The search engine and Android phone software, rattled the tech world with its announcement that it would acquire Motorola Mobility Holdings, allowing it to get into the business of making cellphones and tablets.
The acquisition, Google’s largest to date and an all-cash deal, would put the company in head-to-head competition with its own business partners, the many phone makers that use Android software, as well as with Apple.
The deal, which requires regulatory approval, would also give Google a valuable war chest of more than 17,000 patents that would help it defend Android from a barrage of patent lawsuits.The effect of a Google-Motorola Mobility merger on consumers is unclear.
More than 50 legal actions on account of alleged patent violations are under way against Android. Google itself accuses competitors like Microsoft, Oracle and Apple of waging a hostile campaign against the web search company. Motorola accumulated patents for decades. According to company information, they currently hold over 17,000.A further 7,500 have been applied for. This strong portfolio will be useful to Google in future negotiations with its rivals. The patent arsenal will provide a balance in the fight for market share. Companies that possess numerous key patents normally grant one another mutual-user rights.Google is paying $12.5 billion to advance into this league.

The proposed deal would have ramifications across the tech industry, giving strength to Motorola at a time when Research in Motion and Nokia are faltering.Along with the undoubtedly attractive patent rights, the web company is also buying a great deal of risk. Motorola has not yet surmounted its difficulties. Other Android partners, like Samsung or HTC, could view the takeover with concern, because in spite of all statements to the contrary, doubt remains whether Google will give preference to its own manufacturers over other makers.

If nothing else, Google has never engaged in the production of devices. The narrow margins in cell phone manufacturing compared to the core business of web search, as well as the comparatively high risks, could strain the development of the web company.