Google Completes Motorola’s Deal
Google has completed its $12.5 billion purchase of device maker Motorola Mobility in a deal that poses new challenges for the internet’s most powerful company as it tries to shape the future of mobile computing.
The deal closed on Tuesday, nine months after Google made a surprise announcement that it wanted to expand into the hardware business with the most expensive and riskiest acquisition in its 14-year history.
The purchase pushes Google deeper into the mobile phone business, a market it entered four years ago with the debut of its Android software, now the chief challenger to Apple’s iPhones.
In Motorola, Google gets a mobile phone pioneer that has struggled in recent years. Motorola hasn’t produced a mass-market hit since it introduced the Razr mobile phone in 2005. Once the No 2 mobile phone maker, Motorola now ranks eighth with 2 per cent of the worldwide market share, according to Gartner.
As had been expected, Google CEO Larry Page immediately named one of his top lieutenants, Dennis Woodside, as Motorola’s CEO. He replaces Sanjay Jha, 49, who will stay on just long enough to assist in the ownership change.
Woodside, 43, has spent the past three years immersed in online advertising as president of Google’s America region, which accounted for $17.5 billion of Google’s revenue last year. Motorola Mobility Holdings booked $13.1 billion in revenue during its final year as an independent company.
Nevertheless, Woodside’s background in online advertising is likely to raise questions about whether he is the best choice to oversee a company that specializes in making Smartphones, tablet computers and cable-TV boxes.
“It’s a bit concerning because online advertising is quite different from the hardware business,” Gartner analyst Carolina Milanesi said. “Google is so focused on advertising that it doesn’t consider that kind of thing.”
Google depends on digital ads for 96 per cent of its revenue, which totalled $38 billion last year.
In a statement, Page praised Woodside as an outstanding leader who has “been phenomenal at building teams and delivering on some of Google’s biggest bets”.
The takeover became possible only after government regulators were satisfied that the acquisition wouldn’t stifle competition in the Smartphones market.
China removed the final regulatory hurdle by granting its approval on Saturday. Regulators in the US and Europe had cleared the deal three months ago.
Macquarie Securities analyst Benjamin Schachter believes Google is particularly interested in developing a snazzier tablet computer powered by its Android software to compete against Apple’s hot-selling iPad and Amazon.com’s Kindle Fire.
Owning a handset and tablet manufacturer will also allow Google to exert more control over how Android runs on the devices. That has been difficult for Google to do because it gives away Android to other hardware manufacturers, which can tweak the software to suit their own agenda.
In moving beyond its expertise in search and software into manufacturing a wide range of equipment, Google will test its ability to keep Android partners, shareholders and employees happy, according AP.
