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."
Most Popular Stories
- Will Yahoo Splurge on $1-Billion acquisition of Tumblr?
- Yahoo to Pay $1.1 Billion for Tumblr
- Google Fiber Making an Impact
- Federal Rules Least of Coal Industry's Problems
- Gas Prices Expected to Stay High
- New 'Arrested Development' Episodes 'Dressed Up'
- Facebook, Twitter Announce Apps for Google Glass
- Summer Movies Aimed at Young Men, Teen Boys
- Exciting Night for UFC Fans
- Rand Paul 2016?