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Google deal gives smartphone market a shake-up

by Jenna Mc

Yesterday Google made headlines by announcing it is to buy Motorola Mobility for £7.7bn. By purchasing the mobile hardware manufacturer, Google hopes to “supercharge the Android ecosystem”.

Google has assured smartphone makers that this acquisition will not change it’s commitment to running Android as an open platform. The internet search giant has pledged to run Motorola as a separate unit in the deal, which should be completed by the end of this year.

Google’s chief executive, Larry Page said “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies.

The deal represents a strategic move for Google with web usage increasingly shifting to mobile devices. Some commentators have questioned why Google chose Motorola. In comparison to competitors like HTC and Samsung which have been doing well in recent months, Motorola Mobility was perceived to be struggling.

However Motorola has a history of over 80 years of innovation in communications technology and products, and in the development of intellectual property. This is speculated to be the main reason for the takeover. As the primary developer of the Android software for smartphones, Google is open to being sued by rivals who own related patents. But after the purchase of Motorola Mobility, Google will acquire 17000 patents. This will give smartphone makers who license Android software more protection against future patent lawsuits. Motorola’s status as one of the earliest companies to develop mobile phones and one of the leading mobile companies for the past few decades means it has a wealth of wireless technology patents.

Google commented on its blog: “Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies”.

The takeover has been seen as good news with many experts looking forward to the innovation, increased choice and better user experiences that the takeover will encourage in the smartphone market. This excitement has been reflected in the stock markets with shares in Samsung rising more than 4%, while HTC shares were 2% higher today. Shares in Motorola soared about 56% to $38.22 (just below Google’s offer price of $40 a share). Shares in Asian makers of Android mobile phones have also risen.

Speculation that the Finnish mobile phone company, Nokia, could become a bid target itself (with Microsoft a likely suitor) resulted in Nokia shares listed in New York jumping 17% by the end of the trading day on news of the deal.

Do you think this takeover will lead to innovations in the smartphone market? Leave a comment below.

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