Google deal will add massive power to Android

Google has struck its biggest ever deal – to buy Motorola‘s smartphone and tablet business for $12.5bn.

Motorola – which makes the Motorola Mobility Xoom tablet – has a total of 17,000 patents.

The acquisition of Motorola Mobility is Google’s biggest purchase to date and a deliberate move to bolster the adoption of its Android software, which is used in millions of mobile phones.

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

“Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”

The deal is Google’s biggest challenge yet to Apple, which has dominated the smartphone and tablet markets with the iPhone and iPad.

It also pits Google against Nokia, which signed a deal with Microsoft six months ago in a bid to rebuild its ailing fortunes.

Google will run Motorola Mobility as a separate business but it is not clear how the deal will affect Google’s relationship with other Android partners, specifically HTC, LG and Samsung.

Google “began painting a picture of support with a Web posting that includes approving quotes HTC, LG, Samsung and Sony”.

Analysts predict that half of the world’s smartphones will be using Android by the end of next year, with manufacturers opting to use Google’s operating system rather than develop their own.

The deal gives Google access to Motorola’s patent trove – thought to be about 17,000- at a time when the fight for dominance in the highly lucrative smartphone market has descended into a patents war, with Microsoft and Apple suing Motorola and Google over a string of alleged patent infringements relating to Android.

In a post announcing the deal, Mr Page said it would allow Google to “better protect” Android from “anti-competitive threats” over patents from Microsoft, Apple and other companies.

Motorola Mobility shares soared 59 percent to $US38.80 premarket, approaching the offer price of $US40 a share, which is a 63 per cent premium to its Friday close. Google shares were down 2.8 per cent to $US547.80.

Google expects to complete the transaction by early next year.