Google to Acquire Motorola Mobility

Google is taking a bold new step in its assault of the smartphone market by reaching a $12.5-billion deal to acquire Motorola Mobility, which will give the Internet search giant its own hardware patents.

Google is expected to pay $40 per share of Motorola Mobility, which has been a separate entity from its mother firm Motorola since the beginning of the year. The acquisition is seen as Google’s direct attempt to confront Apple Inc. in the smartphone market. However, some observers say the mammoth deal could ruffle the other smarphone makers already using Google’s Android system. “The danger is that other handset makers feel disenfranchised,” said Richard Windsor, a global technology specialist at Nomura Securities. “Motorola is the weaker player. This could actually collapse the entire community.”

Google CEO Larry Page immediately allayed fears of current Android-using smartphone makers such as HTC and Sony Ericsson, saying that Motorola Mobility will be a different entity from Google and would be run only as another Android licensing hardware maker.

The move is the second major one for new Google CEO Larry Page, who was also behind the recent launching of Google+, the search company’s answer to social network leader Facebook.