In an SEC filing, Google spelled out why it paid $12.4 billion for hardware maker Motorola Mobility, in a deal that closed in May. $5.5 billion of the total price was for intellectual property, specifically “patents and developed technology.” Another $2.9 billion was attributed to cash acquired, $2.6 billion was for “goodwill,” $730 million for customer relationships and $670 million was for “other net assets acquired.”
And in case you’re wondering, Google says that goodwill is “primarily attributed to the synergies expected to arise after the acquisition.” Yep, they said synergies.
At the time of the original acquisition, Google said that the deal would help to “supercharge” the Android ecosystem, meaning that Motorola will continue to make Android devices under Google, obviously. However, in order to gain approval from China, Google had to remain “free and open source” for the next five years.
In a blog post, CEO Larry Page talked about how the combination of the two companies would also “enhance competition and offer consumers accelerating innovation, greater choice, and wonderful user experiences,” – words that implied that Google would soon have a heavy hand in the new devices’ development, whatever they may end up being. Meanwhile, the patents that Google acquired through the deal would help Google fight off competitors Apple, Microsoft, and others. Oracle, for example, sued Google for copyright infringement in 2010, but Google won that battle in court this year.
During this month’s earnings call, Google declined to give specifics as to its strategy with Motorola going forward, but the decent reviews of Google’s Nexus 7 tablet (built with ASUS) do demonstrate that when Google gets involved on the hardware side, it can produce devices that anyone would like…even Apple fans. We still don’t know what’s up with Moto’s Home business, though, and the filing didn’t provide any further clues in terms of Google’s plans there.
But dollar amounts aside, the real reason why Google bought Motorola is spelled out quite plainly in the filing. “Intense competition,” says Google. (Ahem, Apple, right?)
We face intense competition. If we do not continue to innovate and provide products and services that are useful to users, we may not remain competitive, and our revenues and operating results could be adversely affected.