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    Home Latest News
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    Google’s Motorola Home Sale Is a Smart Move: 10 Reason Why

    By
    Don Reisinger
    -
    December 21, 2012
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      Google announced on Dec. 19 that it has signed a deal with Arris to sell off its Motorola Home set-top box business in a deal valued at $2.3 billion. The deal includes a little over $2 billion in cash, as well as $300 million in Arris stock, giving Google about 15 percent ownership in that company.

      The move is being called a good one for Google and Arris, and could lighten the otherwise heavy load Motorola has become on the search giant’s balance sheet.

      Google closed its acquisition of Motorola for $12.5 billion in May. Since then, the company has been going through the mobile firm with a hacksaw trying to find places to cut and save money. In retrospect, $12.5 billion might have been too much to pay for Motorola. And now, Google needs to find some ways to justify to its shareholders that the deal was a good one. Selling Motorola Home was one piece of that puzzle.

      But why? What made the Google-Motorola sale necessary? Here are some of the reasons.

      1. Motorola Home had poor prospects for near-term growth

      Motorola Home is popular in the set-top box world. However, there’s little in the way of growth opportunities in that market. Cable providers and satellite companies are easily getting devices into consumer homes, making it harder and harder for Motorola to sell products into the channel. Over time, it’s possible that the set-top box business will lose steam as the market hits critical mass.

      2. Shareholders are calling for a return

      Google has no choice but to find a way to raise some cash from Motorola. The company paid $12.5 billion for the company and so far, hasn’t been able to justify that price. With a $2.3 billion sale to Arris, it’s showing investors that Motorola might have had more value than some thought.

      3. Arris might be a lucrative investment for Google

      The other side of this deal is that Google gets about 15 percent of Arris. That could be a good thing for the company. Arris’ white box services are performing quite well and the company’s revenue and profits are on the rise. It’s a good time to be an Arris supporter.

      4. Remember TiVo

      Earlier this year, TiVo launched a patent-infringement lawsuit against Motorola, saying that its set-top boxes violated patents. Although it’s likely that the case will be resolved with a licensing agreement, it was a big headache that Google really didn’t need to deal with.

      Google’s Motorola Home Sale Is a Smart Move: 10 Reasons Why

      5. A more agile operation is important

      The problem with Motorola when Google acquired it was that it was bloated and had too many moving parts. With this deal, Google is making the company a bit more agile and capable of handling market challenges. That’s a good thing.

      6. Google doesn’t care about cable company set-top boxes

      What in the world would Google want with a company that delivers set-top boxes to cable providers? Google is in the business of search, advertising, and mobile, and doesn’t really understand the set-top box industry. That it’s getting out of it is probably a good thing for the search giant and Motorola Home employees.

      7. Google TV is already out there

      Let’s not forget that in some ways, the services that Motorola Home delivers are competing with Google TV, a platform the search giant launched a couple of years ago with hopes of transforming entertainment in the living room. Although Google TV hasn’t proven popular, the search company is still trying to get it off the ground. Motorola Home didn’t necessarily play well with that.

      8. Televisions are the future

      Looking at the market and where it’s headed, it’s highly likely that eventually, set-top boxes won’t be required for living room entertainment. Instead, consumers will be able to access their programming and other information from their televisions. It was an idea Steve Jobs said he “cracked” in his biography last year, and something that most market observers believe will happen eventually. Google knows that and doesn’t want to preside over a company operating in a failing industry.

      9. Lack of Adverting opportunities

      Advertising stands at the center of all Google business opportunities. And yet, Motorola Home presented no simply way for the company to bring advertising to customers. So, Google dropped it. If nothing else, Google understands what its company is all about and doesn’t allow itself to get caught up in the wrong areas.

      10. It highlights Google’s desire to sell, sell, sell

      Google’s ability to get this deal done underscores an important point that can’t be overlooked: the search giant is ready and willing to sell any Motorola parts that it doesn’t deem necessary. That’s good news for third-parties looking to spend some cash and even better news for Google shareholders hoping the company will finally see a positive return on its Motorola investment.

      Follow Don Reisinger on Twitter by clicking here

      Avatar
      Don Reisinger
      Don Reisinger is a longtime freelance contributor to several technology and business publications. Over his career, Don has written about everything from geek-friendly gadgetry to issues of privacy and data security. He became an eWEEK contributor in 2009 producing slide shows focusing on the top news stories of the day. When he's not writing, Don is typically found fixing computers or playing an old-school video game.

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