This morning, Google Inc. released its agreement with Motorola Mobility Holdings Inc. to purchase Motorola Mobility for $40.00 per share or $12.5 billion.  Google’s purchase serves as an attempt to increase market dominance by, as Google Chief Executive Larry Page says, “supercharg[ing] the entire Android ecosystem for the benefit of consumers, partners, and developers.”  In order to achieve this goal, Google will be acquiring Motorola Mobility’s patents, keeping Motorola as a separate entity, and maintaining Android’s platform...

The conundrum Google presents itself with is the possibility of establishing greater competition; the hardware manufactures—such as HTC, Samsung, or LG—that purchase Android’s operating systems at present may not continue to do so once Google becomes a direct competitor and begins producing hardware. In this regard, a company such as Microsoft may reap the benefits selling operating systems since the company does not sell hardware.

On the other hand, Google’s purchase will establish the company as stronger competition for Apple and attempt to diminish its overwhelming monopoly.  With this in mind, it would be in Google’s best interest to purchase Sprint before another software competitor, such as Microsoft, scoops the company up.  As a result, Droid will no longer be harmed by shoddy service and Google could take control of the market by launching an Internet speed faster than 4G exclusively for Droids so competitors will take a punch.

Ultimately, it will be interesting to see what happens with Google next, especially considering how conscious Google is about the low profit margins for hardware, with exception to Apple, of course. If purchasing Motorola Mobility’s patents will boost Google’s production of a tablet compatible with Apple’s iPad, Google needs to keep in mind their inexperience with hardware production. Either way, I look forward to seeing what happens.

Written By: Jenna Elizabeth

Invester Google

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