Google recently announced the take-over of Motorola Mobility at a price of R12.5bn. The step is significant to both parties as Google will get additional mobile patents and Motorola will get the much needed cash injection to be able to compete in the market.

The shareholders of Motorola Mobility stand to gain with a whopping 63% more than their shares have traded for at the NY Exchange. It is not a hostile take-over as the move has been approved from both sides.

How Does Google Benefit?

Google is moving into Smartphone manufacturing and as such the purchase of Motorola Mobility will help the company to more effectively challenge the iPhone of Apple. In addition, Google gets more than 14500 patents which can be used to get more control in the market. The company will be able to expand its product range and a means of distributing services through mobile products. It will certainly help them gain momentum in the marketing of Android as mobile platform. Apart from partnerships with Samsung and HTC, Google will now also have Motorola Mobility handsets as vehicles for Android.

What are the Implications for HTC and Samsung?

With Google in solid control of a competitor handset, the two players may rethink their positions. They may search for alternative platforms to Android or may throw in everything to keep Android as platform as to not fall at the side.

Benefits of the Sale for Motorola Mobility

The company has lost a lot of their share value in the past couple of months and was in trouble when it came to keeping profits in place. In addition, it also lost market share to competitors and for the company the sale is thus a welcoming relief. The company had a split in January 2011 when Motorola Solutions went their way with the manufacturing of radio scanning and emergency equipment. With Motorola Mobility then focussed on the handset market it needed a serious financial commitment to compete against large players. The sale gives the company a much needed boost in the competitive mobile market.

Motorola Mobility is the holder of hundreds of patents and a stable USA business which has been able to keep its head up during the technological revolution of the past decade and the severe global economical crisis. They have taken a responsible step to secure their place in the Smartphone industry through the sale to Google – the company that is strong enough to take on even the largest players in the mobile industry.

How Will the Take-Over Help Google Compete in the Marketplace?

Google’s main focus is obviously the thousands of patents including the 6700 pending patents held by Motorola Mobility at the start of 2011. With such a large patent portfolio gained Google will be able to take on Microsoft and the other large competitor, Apple, in the intellectual property domain. It will also give the company enough legal leverage for the negotiation of license agreements and thus income generation. The ripple effect of the sale includes that of speculation that Apple may purchase Nokia and other companies to get more patents.

What Do Industry Analysts Think?

While most see the buying of Motorola Mobility by Google as a sound investment, many are concerned about Motorola Mobility’s future. Google’s intentions are not clear and some think that Motorola will simply play the role of a patent supplier to the giant Google.

Some say that a synergy will not really be possible as the two companies operate in different spheres and ways. Google is a profit magnet with services focussed on software and Internet. Motorola is a handset company with reasonable profits. The means of product delivery differs. Whereas the one delivers services by means of Internet and mobile platforms the other one ships its products in a more tangible form.

Others think that the drive and financial strength of Google may give Motorola the edge again. With two opposite cultures having to fuse, some changes can be expected. No doubt, Motorola will be used to expand the Android mobile software and with the engineers gained, Google will be able to take Android to a whole new level.

Risks Associated with the Acquisition

There is also of course, the issue of Google now competing and working with players such as Samsung and HTC, which begs some concern. There is the risk of alienating the two companies and with that then have them use other software. This in effect could leave Google with only Motorola for its Android platform. It is understandable that companies such as HTC and Samsung may become a bit nervous as their importance to Google has been reduced with the buying of Mobility.

Uncertainty for Motorola Employees

Some analysts speculate that Google may very well please its partners by selling off parts which create conflict of interest. For the workers at Motorola the notion may be a bit scary as job losses may be eminent. The company, which opened its doors already in the early parts of the 20^th century, may become a whole lot smaller if Google will only use what is deems usable.

Overall a Solid Strategy

All in all though, Motorola Mobility had already scaled back on operations in Asia and Europe. When considering that they have lost tremendous market share, the uncertainty that comes with a sale to a search engine giant, may have been a small price to pay if they want to survive the ever increasing Smartphone environment. Fortunes for Motorola are now solidly connected to the Android software while for Google a whole patent warehouse has become available, as well as legal leverage, and expansion possibilities.

Motorola Mobility is, despite the market shrinking, a strong competitor and innovative company. With products such as Xoom, which has been said as one of the strongest tablet competitors against the iPad, the company still has a lot to offer.  For Google the whole handset market may be a bit strange and some adjustments will have to be made to fuse the two cultures, taking both companies into the next realm of Internet TV, powerful tablets, searching tools, and mobility.