Google Buys Motorola for $12.5 Billion, Moves Into Hardware

Google announced it will buy Motorola Mobility for $12.5 billion, in a move that will give the Internet giant a presence in smartphone hardware and bring it thousands of new patents.

The Mountain View, Calif.-based company expects to complete the deal by late 2011 or early 2012 though the purchase may be subject to government approval. Motorola, one of the leading manufacturers of Android devices, will officially become an Google-only phone maker, despite CEO Sanjay Jha expressing interest in developing for Microsoft’s Windows Phone platform.

Google intends to run Motorola as a separate company that will continue to develop Android devices. Android will remain an open platform, allowing other companies to develop devices that run the platform.

But despite Android keeping its status as an open platform, Google’s new purchase makes the company a bit more like Apple.

Until now, Google has been content to let other companies develop mobile phone hardware, while the search giant focuses solely on developing software. Rival Apple, however, crafts both its own software and hardware, ensuring more control over its devices.

This strategy has allowed Apple to profit doubly on the devices it sells and stay competitive with Google, despite not having nearly as many handsets on the market. Google looks to be setting itself up to benefit from the same type of situation by buying Motorola.

But Google’s purchase may give the company more than the ability to develop hardware for its software. Motorola also comes with thousands of patents, which are increasingly valuable as companies sue their competitors seeking a court-ordered ban on products or the implementation of licensing fees.

Motorola’s patents makes a nice consolation prize for Google, which recently lost a bid for the Nortel patent portfolio to a group of competitors led by Microsoft and Apple.

Google’s Motorola purchase is a major change for a company that until now put its focus entirely on smartphone software rather than hardware. If the deal is finalised, it will likely shake up the landscape of the smartphone world, but the exact ramifications of Google’s acquisition of a major phone maker will take time to play out.

This post originally appeared at Mobiledia.

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