Motorola Mobility Holdings' journey has seen the maker of the world's first commercial cellphone dominate its rivals, nearly fall into obsolescence and then claw its way back to relevance in a fast-changing industry.
Now, one of the Chicago area's most well-established technology players
is a wholly owned subsidiary of Google, a Silicon Valley company that has
built its empire not on gadgets but on Web-based services, including a mobile
operating system. Google said Tuesday that it has closed its $12.9 billion
acquisition of Libertyville-based Motorola Mobility, a deal that outfits the
search giant with a robust smartphone patent portfolio and the ability to
build mobile devices that are tightly integrated with Google services.
"Motorola is a great American tech company, with a track record of over
80 years of innovation," Google Chief Executive Larry Page said in a
statement. "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."
That team, however, will not include Sanjay Jha, the former Qualcomm
executive who joinedMotorola Inc. in August 2008 as co-CEO to turn around the
ailing mobile devices division and prepare it to be spun off as an independent
company at the beginning of 2011. Google said Jha has stepped down as CEO of
Motorola Mobility, which will be headed by Dennis Woodside, a Google executive
who was president of the Americas before being tasked with overseeing the
integration of Motorola Mobility.
Page thanked Jha for his work, crediting him for "building the company
and placing a big bet on Android," Google's mobile operating system that Jha
used for Motorola Mobility's smartphones. Jha will "continue to work with
Google to help ensure a smooth transition," Page said.
Woodside is already reshaping Motorola Mobility's executive team,
bringing in new leaders for finance, marketing and human resources, among
other areas. These changes mean executives such as Chief Financial Officer
Marc Rothman and Chief Marketing Officer Bill Ogle are leaving the company.
However, Google said "many members of Motorola Mobility's team will
continue in their current roles." These executives include Iqbal Arshad, a
product development head who was behind the successful Droid line of
Android-based smartphones at Verizon Wireless, and Dan Moloney, who leads the
set-top-box division within Motorola Mobility.
Chris Hazelton, research director for mobile and wireless at 451
Research, said he believes Google is interested in tapping Motorola Mobility's
hardware prowess in addition to the company's 24,500 granted and pending
patents.
"Just the leadership change really shows that they are working to align
the hardware more with Google services," Hazelton said, adding, "whereas (the
acquisition) was a defensive move for (intellectual property), it's also now a
defensive move for protecting those services."
Google declined to make Woodside or Jha available for interviews Tuesday.
In a statement, Woodside offered a brief peek at his strategy.
"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," he said.
Woodside's remarks indicate that under his leadership Motorola Mobility
will cut down on its number of new product introductions. In the past, relying
on a small number of devices has gone badly for Motorola. It stalled when it
couldn't replicate the success of the Razr, for example. But Hazelton said the
strategy could pay off.
"Even if you do launch one device, you can still provide a different set
of services on that same device for a different carrier," he said. "Who are
they going after? That's really Apple. And Apple has one device."
Google's acquisition of Motorola Mobility injects tension into the
relationship between the Mountain View, Calif.-based company and other
phone-makers that use Android. However, Google reiterated Tuesday that Android
remains an open system, and Motorola Mobility will be a licensee.
In addition, The Wall Street Journal reported this month that Google will
expand its Nexus program, which provides early access to new versions of
Android, from one partner manufacturer to as many as five. These moves could
soothe device-makers and keep them from jumping ship to other operating
systems.
"What Motorola represents for (Google), in some ways, is a mobile devices
skunk works ... to figure out how far they can push the experience," said
Chris Silva, a mobile analyst at Altimeter Group. In other words, Motorola can
be a laboratory for Google to experiment with Android and use the resulting
knowledge to help their hardware partners.
The final closing price for Motorola Mobility's stock was $39.98, just
pennies below the $40 per share that Google is paying in the deal. The stock
will now be delisted. While the original purchase price was estimated at $12.5
billion, the final price tag rose to $12.9 billion because of additional
equity awards that were issued, according to a regulatory filing.
Motorola Mobility employs 20,000 people worldwide, with about 3,000 in
Illinois. The company has an agreement with the state to maintain a local
workforce of 2,500 in exchange for more than $100 million in tax credit
incentives over 10 years.
Google declined to comment Tuesday on its plans for changes to Motorola
Mobility's workforce or facilities, though a spokeswoman said the company
remains "committed to Illinois." Most of the new leadership team at Motorola
Mobility are based in Sunnyvale, Calif., or Libertyville. Some are also in San
Diego, where Jha and other executives were based before Motorola's separation
into two companies.
Analysts said the pressure is on Google and Motorola Mobility to show
what they can do in tablets, an industry where Android-based manufacturers
have so far failed to match the dominance of Apple's iPad. Google must also
fend off Microsoft, which is making a push with its Windows Phones in an
attempt to claim a bigger piece of the smartphone market.
Bringing Motorola Mobility into the fold "will push Google's vision of
what Android should be," Hazelton said. "That will help evolve Android and
makes sure it stays competitive with other operating systems."
