Google has completed its $12.5 billion purchase of device maker Motorola Mobility in a deal that poses new challenges for the Internet's most powerful company as it tries to shape the future of mobile computing.
The deal closed Tuesday, nine months after Google Inc. made a surprise announcement that it wanted to expand into the hardware business with the most expensive and riskiest acquisition in its 14-year history.
The purchase pushes Google deeper into the cellphone business, a market it entered four years ago with the debut of its Android software, now the chief challenger to Apple Inc.'s iPhones.
In Motorola, Google gets a cellphone pioneer that has struggled in recent years. Motorola hasn't produced a mass-market hit since it introduced the Razr cellphone in 2005. Once the No. 2 cellphone maker, Motorola now ranks eighth with 2 percent of the worldwide market share, according to Gartner.
As had been expected, Google CEO Larry Page immediately named one of his top lieutenants, Dennis Woodside, as Motorola's CEO. He replaces Sanjay Jha, 49, who will stay on just long enough to assist in the ownership change.
Woodside, 43, has spent the past three years immersed in online advertising as president of Google's America region, which accounted for $17.5 billion of Google's revenue last year. Motorola Mobility Holdings Inc. booked $13.1 billion in revenue during its final year as an independent company.
Nevertheless, Woodside's background in online advertising is likely to raise questions about whether he is the best choice to oversee a company that specializes in making smartphones, tablet computers and cable-TV boxes.
"It's a bit concerning because online advertising is quite different than the hardware business," Gartner Inc. analyst Carolina Milanesi said.
Google depends on digital ads for 96 percent of its revenue, which totaled $38 billion last year.
Google wants Motorola largely for its trove of 17,000 cellphone patents, which the search company can use to defend Android phones against lawsuits accusing them of copying key features from the iPhone.
But in recent months, Google has been signaling that it has been drawing up more ambitious plans for the newly acquired hardware business.
Macquarie Securities analyst Benjamin Schachter believes Google is particularly interested in developing a snazzier tablet computer powered by its Android software to compete against Apple's hot-selling iPad and Amazon.com Inc.'s Kindle Fire.