Google to Buy Motorola Mobility, Major Device Maker

Google has agreed to acquire Motorola Mobility, Motorola's devices subsidiary, for an estimated $12.5 billion, or approximately four times what it paid for display ad giant DoubleClick three years ago. The deal is a major leap forward in Google's mobile ambitions, bringing it into closer competition with Apple.

Motorola Mobility was the mobile devices division of Motorola until its spin-off in January 2011. Google said it plans to continue running the company as a standalone business. In addition to Android smartphones, Motorola Mobility produces tablets, Bluetooth accessories, set tops, digital video recorders, and other products. It reported Q2 2011 net revenues of $3.3 billion.

As Google brings device design and manufacturing in-house, questions will inevitably come up about the future of its open development policy for the Android operating system. In a call with analysts this morning, Google CEO Larry Page pledged fealty to its device and developer partners.

"Android is growing like crazy," he said. "We think this will benefit all partners in the Android ecosystem. "

The deal may also give Google an edge in the recent legal challenges related to mobile patents. In July Google lost a bidding war for Nortel's mobile patents to a group of rivals that include Apple, Microsoft, and Research in Motion. That loss led to a war of words between Microsoft and Google on the companies' official blogs.