Google, generally described in news articles as a search engine giant, will become a cell phone manufacturer following news that it will purchase cell phone makers Motorola for $12.5 billion.
From the San Jose Mercury News:
The deal, by far the largest in Google’s history, has been approved by the boards of both companies. It will give the Mountain View company its own hardware products and allow it to compete more closely with phone- and tablet-makers such as Apple (AAPL), Research In Motion, Hewlett-Packard ( HPQ) and the new alliance between Microsoft and Nokia.
The acquisition also gives Google access to more than 17,000 patents held by Motorola, which pioneered the cellphone business. Analysts said that could help Google stave off a barrage of patent claims levied by Apple, Microsoft and other rivals battling the company’s Android operating system. The deal could also boost Google’s faltering efforts to bring the Internet to living room television sets, by allowing Google to leverage Motorola’s expertise in set-top TV boxes.
Fundamentally, the decision to buy Motorola underscores the growing importance of mobile computing to Google, which draws most of its revenue from selling advertising associated with Internet searches, as consumers and workers increasingly perform more computing tasks with handheld devices. Google’s lead in mobile search is thought to be even greater than its search dominance on desktop computers.
“It’s no secret that Web usage is increasingly shifting to mobile devices, a trend I expect to continue,” Google CEO Larry Page said in a conference call Monday morning.