Motorola acquisition could boost Google in TV business

Google is to acquire Motorola Mobility for approximately US$12.5 billion (€8.8 billion), representing a 63% premium on the closing price of Motorola Mobility shares on Friday.

While Google’s acquisition of the company is being seen by observers primarily as a way for it to strengthen the position of the Android operating platform in the smartphone market, and in particular to strengthen

Google’s hand in patent disputes with rivals including Microsoft and Apple, Google CEO Larry Page and Motorola Mobility CEO Sanjay Jha both made reference to the latter’s TV business as well.

“Motorola is also a market leader in the home devices and video solutions business,” said Page in his blog. “With the transition to Internet Protocol, we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space.”

On a conference call to discuss the announcement, Jha also mentioned the ongoing transition to IP set-top boxes in the market and convergence between mobile, the set-top box and content.

The acquisition of Motorola Mobility could possibly provide a way for Google to drive its Google TV software, which has met with limited success to date, into the cable and IPTV markets. However, that could meet with resistance from service providers and content owners.

Earlier this year Google revealed that the next iteration of its tablet operating system, Honeycomb 3.1, would also be adopted as the next version of the Google TV platform and that it would launch a movie rental service via the Android market. The new platform is being rolled out to Android-based devices including Motorola’s Xoom tablet on the Verizon network.

Mobile remains the key driver behind the deal however. Page said that the deal would “increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.” Google has suffered from a number of patent battles initiated by its rivals in the smartphone business, and Earlier this year Microsoft, Apple and RIM teamed up to beat Google in an auction for patents held by Nortel Networks.

Page said that Google would run Motorola Mobility as a separate business and hat Android would remain open to rival hardware manufacturers, and Google’s announcement was accompanied by statements of support from other hardware manufacturers. However, there are likely to concerns that Motorola will receive privileged treatment.

The deal, which is expected to close towards the end of this year or early next year, may also attract regulatory scrutiny in the US and Europe.