With the "unanimous" approval of both boards, Google has agreed to hand over $40 per share to acquire Motorola Mobility--the spun-off phone-making wing of the original Motorola, separate from its government and enterprise business. The price is a big premium on Motorola's last closing share price, and amounts to some $12.5 billion. That's about a third of Google's cash reserves, as per the most recent figures, which demonstrates exactly how gigantic a move this is. But exactly why is Google pulling this trick off? 
 
 Hardware-software synergy 
 
 The most obvious interpretation of the deal is that Motorola is already an internationally renowned expert in something Google is painfully naive about: manufacturing hardware in massive numbers. Motorola brought the world many of its important mobile phones over the last several decades, and the famous Razr device was so unusual and radical in design that it sold over 130 million units. While Motorola's fortunes then took a dive, it took a bold move and launched itself into the Android smartphone market--making the Droid line of smartphones that saw broad market approval. 
 
 Now Google gets access to Motorola's design and engineering process, and this will allow it to carefully tailor both future smartphone hardware and its own Android OS software together. Don't mistake this for another Nexus One, which came from external manufacturers. 
 
 Making phones in-house means a Google Droid phone will likely have better battery life, slicker performance, greater reliability, and fewer bugs, which is exactly what Google needs to rival Apple, with its iron-fist control over seamless integration of software into custom-crafted hardware. 
 
 And because Motorola is already so huge, and long-established, it has extensive and very strong links to manufacturing partners around the world. Those relationships are now owned by Google, which means it can hone and refine them to meet future Android phone (and tablet?) needs. 
 
 Google is in the hardware business. 
 
 Patents 
 
 Here's a gem in the Google blog post: 
 
 We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to "protect competition and innovation in the open source software community" and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google's patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies. 
 
 This transaction, as much as it is about getting some really, really slick Android hardware out on sale, is also about protecting Android from IP battles. 
 
 The ongoing and devisive legal battles around the world concerning theft of Apple IP by Samsung (on its Android-powered smartphones and tablets) and other Android device makers are numerous and complex: Apple even succeeded in barring sales of Samsung's flagship Android tablet PC the Galaxy Tab 10.1 in Europe, on the understanding that the design, elements of the UI and even the packaging are clones of Apple's own efforts. It's widely thought that Apple sees these numerous suits as a way of indirectly tackling the way Android gently emulates some of iOS's functionality. 
 
 Android also closely mimics Microsoft IP, and in a similar move to Apple, Microsoft has been indirectly snipping away at the problem by targeting different Android device makers--generating more income in licensing fees than its own Windows-powered smartphone business makes. Motorola itself had very recently hinted it may attempt collecting royalties on Android sales, which would further damage the device's credibility (by potentially bumping up the handset's prices across the board). 
 
 With the recent billion-dollar purchase of Nortel's extensive patent cache, many of which may be applicable to the smartphone and tablet computing world, Apple and a group of similar companies sparked off a war of words, centered on IP, with Google. Google alleges the deal is a murky attempt at killing its business, but its own bids--which were multiples of scientific numbers like Pi--didn't seem serious. By grabbing Motorola, Google's certainly gained access to more patents to shore up its Android patent portfolio and thus enable it to counter (and respond with counter suits) any future IP threats. 
 
 Where this leaves other Android phone makers 
 
 This is a very difficult question, and one that casts a long-enough and deep-enough shadow that Google felt it necessary to mention several times in the press release. Motorola will be run as a "separate business," and it will remain a "licensee of Android," maintaining a slight separation from Google proper, and suggesting the Motorola brand won't be going away. Though we expect that Motorola smartphones may quickly become the slickest, best-performing Android units, Google's careful to note "Android will remain open" and the partnership will make "amazing user experiences that supercharge the entire Android ecosystem." Also, Google's mobile boss Andy Rubin is quoted saying the overall Android vision is "unchanged" and Google's strongly committed to keeping it "an open platform" with a "vibrant open source community" thanks to "all our valued Android partners." 
 
 Google is sensitive that other makers like HTC and Samsung will be very nervous about the new deal, so its promising that Android will remain as it is--a very accessible and "open" platform for other makers to build great devices upon. But does this actually ring true? If Motorola's future Android phones acutally do benefit from enhanced hardware-software integration, then they may out-class the competition (particularly if Motorola helps with Google's sometimes sticky interpretation of the core Android user interface) ... and that could steal market share from Google's own partners. It's going to be a tricky path to walk. 
 
 The fallout for HP/Palm, Nokia 
 
 Competitor smartphone platforms will be worried, for sure. Android was already a hugely powerful competitor and has snipped up over half the new touchscreen smartphone market (and about 20% of the tablet market), leaving little space for Palm or Microsoft. Microsoft has big hopes for the future of its Windows Phone 7 software, particularly thanks to its hardware-software partnership with Nokia, and HP has great hopes for the future of its Pre phones and TouchPad tablets which are the result of a software-hardware synergy created when it bought Palm. 
 
 Google, however, may have seriously dented these ambitions. By buying Motorola, it's positioned itself to concrete its hold over the smartphone game, and possibly deliver even better hardware to market. Apple's iPhone platform isn't going anywhere either, and it's even predicting bigger sales of its future iPhone offerings than had originally been predicted for 2011. Between these two giants, HP/Palm, Nokia/Microsoft and others may see little space to maneuver. 
 
 Update: Google just completed a webcast press interview about the news, and kept very closely to the lines that've been presented in both the press release and the company's own blog post. It's all about bringing Motorola's expertise into the fold, Motorola will remain as a separate company, and Google values its other Android partners. In fact, the company spoke to the top five licensees, and secured "enthusiastic support," by which we can assume Google allayed their fears. One way they may be planning to do this is by having a bidding program for the flagship Nexus line of Google-branded Android phones, which is still open to other companies (as well as Motorola)--HTC and Samsung have been previous partners here. 
 
 There's also an intriguing hint about Motorola's "IP set-top boxes," or Net TV devices. Google has so far failed to dent this market, despite trying hard, but sees "great convergence" between mobile and set-top box content, and plans to "accelerate" this process. A big hint that Google may try a different, Apple TV-style attempt to get into the game. 
 
 [Image: Flickr user don solo] 
 
 Chat about this news with Kit Eaton on Twitter and Fast Company too. ||||| Bay Ismoyo/Agence France-Presse â€” Getty Images 
 
 Can a software company build its own smartphone? We may find out soon. 
 
 This past week, Google completed its acquisition of the hardware maker Motorola Mobility for $12.5 billion, which could lead to the search giantâ€™s making its own smartphone. But another software titan might be getting into the hardware game as well: Facebook. 
 
 Employees of Facebook and several engineers who have been sought out by recruiters there, as well as people briefed on Facebookâ€™s plans, say the company hopes to release its own smartphone by next year. These people spoke only on the condition of anonymity for fear of jeopardizing their employment or relationships with Facebook. 
 
 The company has already hired more than half a dozen former Apple software and hardware engineers who worked on the iPhone, and one who worked on the iPad, the employees and those briefed on the plans said. 
 
 This would be Facebookâ€™s third effort at building a smartphone, said one person briefed on the plans and one who was recruited. In 2010, the blog TechCrunch reported that Facebook was working on a smartphone. The project crumbled after the company realized the difficulties involved, according to people who had worked on it. The Web site AllThingsD reported last year that Facebook and HTC had entered a partnership to create a smartphone, code-named â€œBuffy,â€? which is still in the works. 
 
 Rajanish Kakade/Associated Press 
 
 Now, the company has been going deeper into the process, by expanding the group working on Buffy, and exploring other smartphone projects too, creating a team of seasoned hardware engineers who have built the devices before. 
 
 One engineer who formerly worked at Apple and worked on the iPhone said he had met with Mark Zuckerberg, Facebookâ€™s chief executive, who then peppered him with questions about the inner workings of smartphones. It did not sound like idle intellectual curiosity, the engineer said; Mr. Zuckerberg asked about intricate details, including the types of chips used, he said. Another former Apple hardware engineer was recruited by a Facebook executive and was told about the companyâ€™s hardware explorations. 
 
 When asked Friday, Facebook did not deny or confirm that a project to build a smartphone existed, but pointed to a previous statement it gave to AllThingsD last year that said in part, â€œWeâ€™re working across the entire mobile industry; with operators, hardware manufacturers, OS providers, and application developers.â€? 
 
 Mahesh Kumar A/Associated Press 
 
 For Facebook, the motivation is clear; as a newly public company, it must find new sources of revenue, and it fears being left behind in mobile, one of the most promising areas for growth. 
 
 â€œMark is worried that if he doesnâ€™t create a mobile phone in the near future that Facebook will simply become an app on other mobile platforms,â€? a Facebook employee said. 
 
 Facebook is going to great lengths to keep the phone project a secret, specifically not posting job listings on the companyâ€™s job Web site, but instead going door-to-door to find the right talent for the project. 
 
 But can a company that is wired as a social network learn how to build hardware? Mixing the cultures of hardware and software designers is akin to mixing oil and water. With the rare exception of Apple, other phone makers arenâ€™t very good at this. 
 
 The biggest names in consumer electronics have struggled with phone hardware. Hewlett-Packard tried and failed. So did Dell. Sony has never done very well making phones. 
 
 â€œBuilding isnâ€™t something you can just jump into,â€? explained Hugo Fiennes, a former Apple hardware manager for the first four iPhones who has since left Apple and is starting a new hardware company, Electric Imp. â€œYou change the smallest thing on a smartphone and you can completely change how all the antennas work. You donâ€™t learn this unless youâ€™ve been doing it for a while.â€? 
 
 He added, â€œGoing into the phone business is incredibly complex.â€? 
 
 Facebook also faces hurdles, often of its own making, on mobile. Twitter, for example, is fully integrated into the Apple iPhone and allows people to seamlessly send Twitter messages with photos or article links. Facebook, which has had a contentious relationship with Apple, is still not integrated into iOS. 
 
 One Facebook employee said the phone project had been rebooted several times because Facebook originally thought it could figure out hardware on its own. The company has since learned that it needed to bring in people with phone-making experience, several people said. So it is hiring hardware engineers to work with a phone manufacturer and design the shape, style and inner workings of a Facebook phone. 
 
 Despite the difficulties, Facebook seems well positioned in certain ways to enter the smartphone market. It already has an entire operating system complete with messaging, calendar, contacts and video, and an immense app store is on its way with thousands of highly popular apps. Thereâ€™s also that billion-dollar camera app, in the form of Instagram. 
 
 If Facebook fails with its own team of engineers, it could buy a smartphone maker. The company took in $16 billion from its bumpy I.P.O. It could easily scoop up an infirm company like Research in Motion, which is valued at less than $6 billion, and drop a beautifully designed Facebook operating system on top of RIMâ€™s phones. HTC, which is upset with Google for buying Motorola, is worth about $11.8 billion and becoming cheaper by the day. 
 
 Facebook would not necessarily challenge Apple if it entered the smartphone marketplace. Instead, it could be Facebook vs. Google, which makes the Android operating system, with both companies going after a huge number of buyers of lower-priced smartphones. 
 
 â€œWhen you offer an advertising-based phone, youâ€™re targeting all the users on prepay that are budget-conscious of their communications costs,â€? said Carolina Milanesi, a vice president and analyst for the Gartner Group. 
 
 Ms. Milanesi said that at a mass market level, both companies could take the same approach as Amazon, offering low-cost hardware, like the Kindle, and subsidizing some of the costs through advertising. 
 
 After all, both Facebook and Google make their money through advertising. If the companies have the opportunity to continually put ads in front of people on a smartphone screen, you would think the only question left would be to pick the right ringtone that makes that ka-ching sound.
– Google, Facebook, Amazon, and Apple are widely considered the kings of digital world. But as they look to grow further, increasingly they will need to target each other's turf, dramatically raising the stakes in cyber conflicts in 2013, reports the Wall Street Journal. Google. Perhaps the most wide-ranging of the giants, it's clashing more and more with rivals in telecommunications and cable TV. Thanks to its $12.5 billion purchase of Motorola, expect Google to expand in all aspects of Android and smartphones. (It also wants to take most of Microsoft's Office business, notes SlashGear.) Amazon. The Kindle Fire HD (running on Google's Android) has garnered raves and earned a strong niche versus Apple's iPad. But rumors are swirling that 2013 will be the year Amazon brings out a smartphone of its own. Facebook. With the social network rewriting its code for mobile devices, many predict that a move into hardware will be coming any day now, even though Mark Zuckerberg has repeatedly denied it. Also expect to see Facebook getting more aggressive with its own search technology and online retailing. Apple. Apple may be king of the tech hill these days, but many experts say that just gives the company more areas it needs to defend. But Apple isn't only playing defense, and is increasingly looking to move into TV.