Google’s $12.5B deal for Motorola Mobility shakes up the mobile market

Apple and Google were once so close that Google’s former CEO, Eric Schmidt, sat on Apple’s board. But Google has since rolled out Android and given hardware makers a way to counter the iPhone and iPad. Schmidt resigned from Apple’s board two years ago.

Microsoft, for years one of Google’s most bitter rivals, is desperately trying to make inroads in the mobile device market.

John McCarthy, an analyst with Forrester Research, says Microsoft might try to counter Google by pursuing a long-rumored takeover of its partner, Nokia.

Oracle Corp. is seeking billions of dollars from Google in a federal lawsuit alleging that Android owes licensing fees for using the Java programming language that Oracle acquired from Sun Microsystems.

Buying patent protection offered by Motorola Mobility will be expensive. Although Google has $39 billion in cash and can easily afford it, the price translates to $40 per share, 63 percent above Motorola’s stock price before the deal was announced.

The deal also will test the ability of current Google CEO Larry Page to avoid a clash of cultures while he is still learning the nuances of the CEO job, which he took only four and a half months ago. With 19,000 workers, Motorola Mobility’s payroll isn’t that much smaller than Google’s 28,800.

Motorola Mobility, based in Libertyville, Ill., has been struggling to come up with a product that has mass-market appeal since it introduced the Razr cell phone in 2005.