Google (Nasdaq: GOOG) agreed to buy Motorola Mobility Holdings Inc. (NYSE: MMI) for $12.5-billion, one of the largest hardware supporters for Google's Android mobile operating system.
Under the deal, Motorola Mobility will remain licensee of Android, which will stay open and available for use by other hardware manufacturers at no cost.
The transaction would thus provide Google with a hardware-manufacturing business, that could position it to better compete against Apple Inc. (Nasdaq: AAPL).
The $12.5-billion price tag represented a whopping 63 percent premium to MMI shares’ Friday closing price.
International Business Times spoke with Hank Galligan, Director and Leader of the Software Practice at BDO USA LLP, to discuss some of the ramifications of the deal.
IBTIMES: Why did Google make this acquisition?
GALLIGAN: It's tough to say, as only Google really knows. I don’t believe they think it's their best strategy to become a hardware company, so I would lean towards expanding their patent portfolio as a primary goal. But that is a lot of money for patents.
IBTIMES: Motorola Mobility is a hardware supporter for Google's Android mobile operating system. Does this help Google to better position itself against Apple?
GALLIGAN: It will depend what Google decides to do with the Hardware business. Assuming they keep it, then it may allow them to compete more directly with the iPad (as to date they only compete from an operating system standpoint).
However, that may not mean they are better positioned. If Google's hardware partners turn out to be unhappy with the deal, it may actually result in less hardware running Android and [less] competing with Apple.
IBTIMES: What will happen to other companies who license Android at no cost from Google?
GALLIGAN: I suspect their business deal will remain the same, however, the question will be whether they want to use the same operating system as one of their competitors.
IBTIMES: This is Google’s biggest acquisition to date – do you expect them to make more aggressive acquisitions in the near-term?
GALLIGAN: Google is acquisitive -- if this is a signal in a change in business strategy then I expect to see them making similar acquisitions in the future.
IBTIMES: Motorola Mobility’s stock price had been steadily declining all year -- what has been their main problems?
GALLIGAN: I expect that it has a lot to do with the competition in the handset market and no clear differentiation for them in the marketplace.