SAN JOSE—With its surprising $12.5-billion deal to buy Motorola Mobility Holdings Inc., Google Inc. is gaining new ammunition for its ongoing patent battles with competitors like Microsoft Corp. and Oracle Corp., while strengthening its position as a major player in a tech industry that is moving beyond PCs.
Analysts said the deal announced on Monday could put Google in a stronger position to compete head-to-head against Apple, which in many ways has set the standard for smartphones and tablets in recent years. Buying Motorola will allow search giant Google to produce its own mobile devices, with hardware and software designed to work elegantly together, which experts say is one of the big reasons for Apple’s success.
Google’s Android software is widely used by Motorola and several other mobile device-makers, but Google itself has not been a device-maker before now.
The deal—which is Google’s biggest acquisition ever and the largest in Silicon Valley since 2008—is also part of the Mountain View, California company’s efforts to position itself for the future of the Internet, as people increasingly use smartphones, tablets and even the living room TV set to access the Web.
“It’s no secret that Web usage is increasingly shifting to mobile devices, a trend I expect to continue,” Google CEO Larry Page said in a conference call announcing the deal. “With mobility continuing to take center stage in the computing revolution, the combination with Motorola is an extremely important event in Google’s continuing evolution that will drive a lot of improvements in our ability to deliver great user experiences.”
The deal has been approved by the boards of both companies, and is expected to be closely scrutinized by regulators in both Washington and Europe, although analysts and antitrust experts said on Monday they expect it will be approved.
If so, Google would take its place among a select group of companies that make both hardware and software for hand-held computing gadgets.
Apple, whose iPhones and iPads run its iOS software, is the most prominent. But that group also includes BlackBerry-maker Research In Motion Ltd., Hewlett-Packard Co. with its webOS software, and the new alliance between Microsoft and Nokia Corp.
The deal also gives Google access to more than 17,000 patents held by Motorola, a pioneering cell-phone maker that became an early partner using Google’s Android mobile operating system in 2008. Analysts said those patents could help Google stave off a barrage of claims levied by rivals battling the company’s Android mobile-operating system.
Page acknowledged this strategy, saying in a blog post: “Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anticompetitive threats from Microsoft, Apple and other companies.”
Analysts said the deal could also boost Google’s faltering efforts in Internet-connected TVs. Motorola is a major supplier of set-top boxes for cable TV providers.
“It’s reasonable to assume that Google expects that working with Motorola will give them access to a lot of the decision-makers in the cable world,” said Andrew Frank, an analyst with Gartner.
The decision to buy Motorola underscores the growing importance of mobile computing to Google, which draws most of its revenue from selling advertising associated with Internet searches. Google’s lead in mobile search is thought to be even greater than its search dominance on desktop computers, and Google executives believe as much as 80 percent of the company’s revenues may come through mobile devices in the future.
In the past year, Android has become the most popular operating system for mobile devices in the world, and is used by larger Android phone-makers Samsung, HTC and LG. Google vowed that it will continue to let other manufacturers use Android on an equal basis, and it released a series of upbeat statements on Monday from those manufacturers, saying they welcomed the Motorola deal.
But several analysts said many of those other companies are likely worried that Google will favor Motorola products—by providing the latest features for Motorola phones first, for example—and that their ability to use Android may be jeopardized in the future.
In Photo: The Google Inc. homepage is seen on a Motorola Holdings Inc. mobile device running on Google’s Android software in Park Ridge, Illinois, on Monday. (Bloomberg News)
