Google plans to plunk down $12.5 billion to acquire Motorola Mobility Holdings, the long-struggling mobile arm of Motorola, a move that gives Google a major edge as it bulks up its mobile presence and kicks its Google Android mobile operating system into overdrive.
"We expect that this combination will enable us to break new ground for the Android ecosystem," Andy Rubin, Senior Vice President of Mobile at Google, said in a statement. "However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices."
Google and Motorola Mobility are already tied together by Motorola's use of Google Android, the mobile operating system that over the past three years has made Google a major player in the high-octane smartphone and tablet markets. According to Google, adding Motorola Mobility to the fold will "supercharge the Android ecosystem and will enhance competition in mobile computing." As part of the deal, Motorola Mobility will remain a licensee of Android and Android will remain open. Google will operate Motorola Mobility as a separate business.
"Motorola Mobility's total commitment to Android has created a natural fit for our two companies," said Google CEO Larry Page in a statement. "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 the Motorolans to our family of Googlers."
Motorola split into two separate businesses earlier this year creating Motorola Mobility Holdings, which covers Motorola's set-top boxes, cable equipment and home business and also its handsets and mobile devices, and Motorola Solutions for its networks and enterprise mobility divisions.
The Motorola split had been in discussions since 2008 and later that year Motorola tapped former Qualcomm COO Sanjay Jha to run its mobility division amid several quarters of slumping mobile device sales. In recent quarters, Motorola's mobile sales have seen a bit of a turnaround.
"This transaction offers significant value for Motorola Mobility's stockholders and provides compelling new opportunities for our employees, customers, and partners around the world," Jha said in a statement. "We have shared a productive partnership with Google to advance the Android platform, and now through this combination we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home businesses."
Google's Motorola acquisition raises questions over Motorola's future with other mobile operating systems. Just last week Motorola said it was open to developing Windows Phone-based smartphones.
The transaction ahs received approval by the two companies' respective boards, and it's expected to close by the end of this year or early 2012, Google and Motorola said.