Android smartphones get 'ecosystem supercharge' [VIDEO]
Android smartphones and their users can thank Google for splashing out $12.5 billion to buy Motorola Mobility along with all the patents they hold. The purchase will be Google's largest.
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Many upstart manufacturers, like HTC, had only small patent portfolios of their own, leaving them vulnerable to Apple Inc. and Microsoft Corp.Skip to next paragraph
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Getting Motorola's patents would allow Google to offer legal cover for HTC and dozens of other device makers, including Samsung Electronics Co., that depend on Android.
The deal is by far the largest Google has pursued in its 13-year history. Motorola Mobility's price tag exceeds the combined $9.1 billion that the company has paid for 136 previous acquisitions since going public in 2004, according to filings with the Securities and Exchange Commission.
Buying Motorola also would push Google into phone and computer tablet manufacturing, competing with other device makers who rely on Android. The largest makers of Android devices are all supporting a deal thatGoogle CEO Larry Page said was too tempting to resist.
"With mobility increasingly taking center stage in the computing revolution, the combination with Motorola is an extremely important step in Google's continuing evolution," Page told analysts in a conference call Monday.
Google pounced on Motorola less than two months after a group including Apple and Microsoft paid $4.5 billion for 6,000 patents owned by Nortel, a bankrupt Canadian maker of telecommunications equipment.
Leaving no doubt about the mounting antagonism among the companies, Google's top lawyer lambasted Apple and Microsoft for their legal maneuvering earlier this month in a blog post titled "When patents attack Android."
"We believe this acquisition was solely driven by the ongoing patent war," Sanford Bernstein analyst Pierre Ferragu wrote in a research note, referring to the Google deal.
Apple and Google were once so close that Google's former CEO, Eric Schmidt, sat on Apple's board. ButGoogle has since rolled out Android and provided hardware makers a way to counter the iPhone and iPad. Schmidt resigned from Apple's board two years ago.
Microsoft, for years one of Google's most bitter rivals, is desperately trying to make inroads in the mobile device market. John McCarthy, an analyst with Forrester Research, says Microsoft may try to counter Googleby pursuing a long-rumored takeover of its partner, Nokia.
Investors were betting on that possibility Monday. Nokia stock rose 93 cents, or more than 17 percent, to $6.29. Research In Motion stock climbed $2.55, or more than 10 percent, to $27.11.
Oracle Corp. is seeking billions of dollars from Google in a federal lawsuit alleging that Android owes licensing fees for using the Java programming language that Oracle acquired from Sun Microsystems.
Buying patent protection offered by Motorola Mobility will be expensive. Although Google has $39 billion in cash and can easily afford it, the price translates to $40 per share, 63 percent above Motorola's stock price before the deal was announced.