The transaction, expected to close by the end of 2011 or early 2012, is subject regulatory approvals, especially in the US and the European Union, as well as the approval of Motorola Mobility’s shareholders (it has received board approval).
This acquisition marks Google’s formal entry into the handsets game, and it will be interesting to see how the rest of the handset ecosystem responds to this deal. Google has, in the announcement statement, gone out of its way to state that Android will remain open, looking to preempt any statements voicing concerns about the future of Android. It says that Motorola Mobility will be run as a separate business, and an Android licensee. Remember that Motorola was among the first to launch an Android phone, with the Motorola Droid.
What remains to be seen is whether any Google phones in the future are powered by Motorola competitors like HTC, Samsung and LG. We’re not sure if it will, as Google claims, “Supercharge Android, Enhance Competition”. On a side note, this might add fuel to the ‘Will Microsoft buy Nokia?’ fire.
What Google Gets
The synergy between Motorola Mobility and Google possibly goes beyond just Android powered handsets, or its focus on LTE smartphones and tablets:
– Possibly for Google TV, there is fit with Motorola Mobility’s Home Segment, where it recently introduced Motorola Televation, a broadband video device enabling consumers to watch live TV on a connected IP device anywhere around the home.
– It also has the Medios Xperience platform which enables telecom operators to merge video content with social networking, games and web-based content, and deliver interactive functionality with broadcast television and video-on-demand services.
This fits in with Google’s approach to increase consumption of online content and services, which in turn helps expand usage of their core search business.
Motorola Mobility Financials
Motorola Mobility reported net revenues of $3.3 billion in the second quarter of 2011 (ending June 30th 2011), up 28 percent year on year, with a GAAP loss of $56 million. It shipped 11 million mobile devices, including 4.4 million smartphones and 440,000 tablets. Device revenues were at $2.4 billion, with a GAAP operating loss of $85 million. Revenue growth for the company has been coming largely from Latin America and China. At the time of the announcement of its earnings, Motorola Mobility CEO and Chairman Sanjay Jha had said that the company expected to achieve profitability in the fourth quarter this year.