Google's planned acquisition of Motorola Mobility for $12.5 billion might give the Internet giant a firm foothold in the mobile device landscape, but it also gets it deep inside the living room thanks to Moto's significant STB business.
Beyond mobile phones and media tablets like the top-echelon Xoom, Motorola Mobility has a healthy install base of broadband cable modems and set-top boxes. That gives Google an attractive footprint to leverage on a number of different fronts within the digital home, perhaps with a Trojan Horse strategy of pushing Android-based middleware out to shore up its lacklustre connected TV strategy.
"Google...had its foray into this space with Google TV seen widely as an experiment," explained Kevin Burden, vice president and practice director for mobile networks at ABI Research. "A tie-up between Google and Motorola could give Google the expertise it needs to be taken seriously and gain an eventual foothold in content deliver to the home."
Google, which had on hand $39.1 billion in cash, cash equivalents and marketable securities as of June 30, 2011, also is said to be a potential suitor for Hulu, the online TV Website. Despite its support for HD and Flash, Android, partcularly Android tablets, have been lacking in the video content department.
Also, Moto is well-known for its support of operators wanting to deploy a TV Everywhere solution-- a critical expertise for Google to have in-house. WIth the flop that was the Google Nexus One mobile handset and the stagnant reception for the Google TV project, the company isn't known for its friendliness to operators in general or for its success in the hardware game. The former attempted to cut out the operator as direct distributors; the latter has only made content companies nervous about cannibalising existing pay-TV revenue and proven to be a losing bet for partners like Logitch and Sony, both of which have slashed the pricing on Google TV products.
The tie up will, at the very least, give Google some patent coverage as it wrestles with challenges to the Android OS, and it will most certainly help extend Android to new screens.
"We expect that this combination will enable us to break new ground for the Android ecosystem," said Andy Rubin, Google’s senior vice president of Mobile, 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."
Google plans to run Motorola Mobility as a separate business, and Motorola Mobility will remain a licensee of Android. Google will be paying $40 per share in cash; in the second quarter, Motorola Mobility posted revenues of $3.3 billion and shipped 11 million mobile devices, including 4.4 million smartphones and 440,000 XOOM tablets. The sale is expected to close by the end of the year or early 2012 following customary closing conditions, including regulatory approvals and the approval of Motorola Mobility’s stockholders.