acquisition of Motorola. First announced in August 2011, the $12.5 billion deal took longer than expected to clear regulatory hurdles in China. China gave Google the green light on May 19 and Google now owns Motorola Mobility, for which it paid $40 per share in cash.
Now that the deal is complete, Google has already made changes to the company's leadership. Motorola CEO Sanjay Jha, who led the company for about three and a half years, is stepping aside and being replaced by Dennis Woodside, a Google veteran. According to Google, Woodside played a pivotal role in the acquisition process. Jha will work with Google to help complete the leadership transition, but only temporarily.
"I'm happy to announce the deal has closed," said Google CEO Larry Page. "Motorola is a great American tech company, with a track record of over 80 years of innovation. It's a great time to be in the mobile business, and I'm confident that the team at Motorola will be creating the next generation of mobile devices that will improve lives for years to come."
[ Read about Google's plan to sell "pure Android" smartphones through its Google Play Store. See Why Google's Nexus Plan Makes Sense. ]
One concession Google had to make in order to garner approval from Chinese antitrust regulators was a commitment to Android's openness. Google agreed to keep the platform open to other handset makers for a period of at least five years from the closing of the acquisition. Google explained in its press release that Motorola Mobility will remain a licensee of Android and Android will remain open. Motorola Mobility will be operated as a separate business.
Google and Motorola need to get to work. Motorola Mobility's new CEO Dennis Woodside has already made some changes. He's bringing in a refreshed executive team and mixing them up with a number of existing execs from the Motorola side of the business. Aside from forming a new management team, here are five other things Woodside needs to do.
Focus on Fewer, Better Phones. Motorola has followed the industry trend of launching more than a dozen handsets each year, ranging from entry-level devices to high-end smartphones. The company needs to pull back and bring superior products to market rather than employ the shotgun approach.
Differentiate Hardware. Creating unique handsets is becoming more and more difficult, but differentiation is key to selling in the crowded smartphone market. Motorola can't be afraid to take risks on new technology to achieve this goal.
Foster and Improve Existing Business Partners. Motorola has relationships with carriers worldwide--relationships that were in place long before Google came along. Google and Motorola need to tread lightly and make sure these relationships can move forward productively. If wireless network operators, for example, start to think that Google is going to be another Apple and exert too much control over Android devices, they might not be willing to sell Motorola's devices.
Make a Swift Decision About the Cable Box Business. Motorola Mobility's other business is to provide set-top boxes to cable television subscribers. This is a decent business, but it isn't why Google bought Motorola. Google picked Motorola due to its 17,000 mobile technology patents. The cable box business can be a boon for Google TV, which has failed to really catch on since its 2010 launch. Google and Motorola need to either plow forward with it in a unique and appealing way or divest it so the company can concentrate on its core businesses.
Be Careful With Those Patents (And Settle with Microsoft). The 17,000 patents provide Google, Motorola, and Android licensees some protection in the current smartphone patent war among the hardware vendors. Motorola and Google would do well to sidestep these battles. More importantly, Motorola recently lost a patent case with Microsoft. Microsoft won a ban on Motorola imports. If the ban goes into effect, Motorola won't be allowed to import its key smartphones and sell them in the U.S. Google and Motorola need to sit down with Microsoft and hammer out an agreement for the patents at hand and move past this distraction.
Woodside seems bullish on Motorola's chances moving forward. Let's hope he can do good things with Motorola and get the company back in the game.
"Motorola literally invented the entire mobile industry with the first-ever commercial cell phone in 1983," said Woodside. "Thirty years later, mobile devices are at the center of the computing revolution. Our aim is simple: to focus Motorola Mobility's remarkable talent on fewer, bigger bets, and create wonderful devices that are used by people around the world."
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