Google ( GOOG ), the creator of the world's most widely-used smartphone operating system, will now compete more directly with rival Apple ( AAPL ) after acquring Motorola's ( MMI ) Mobility cell phone division at a cost of $12.5 billion.
Google created the open-source Android operating system, which is used around the globe on a variety of different hardware. It dominates the market, having toppled Research in Motion's ( RIMM ) BlackBerry platform. Apple, on the other hand, has a slightly smaller share but possesses the advantage of an integrated platform that ties together its iOS with the iPhone and iPad lines of devices.
The hardware-software integration is characteristic of Apple products, known for their unity of form and design and the price premium they command on the market. Google's ecosystem, by contrast, has spread across a wide variety of models and has taken footholds in both the high and low segments of the mobile market.
By purchasing Motorola Mobility, Google shows that it wants to compete in the hardware sector as well, marking the first time Google has really seized control of the device production process. The news should also boost the NASDAQ and the tech sector as a whole, as its one of the largest acquisitions in recent memory.
Google paid $40 per share for the firm, a 63 percent premium. At 10 a.m. EST, shares were up 56.72 percent to $38.35.
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