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Google rewards Motorola Mobility’s ‘Android bet’

Google has agreed a deal to buy Motorola Mobility, the smartphone and tablet maker, for $12.5 billion.

The announcement signals Google's first venture into the manufacturing business and is also the search giant's biggest acquisition to date.

Motorola Mobility, which was spun out by Motorola as a separate business earlier this year, has been developing devices exclusively for Google's Android operating system since 2008.

Larry Page, Google's CEO, said that "Android bet" had led to a successful strategic partnership, which had now progressed to a formal merger.

"Together we will create amazing user experiences that supercharge the Android ecosystem for the benefit of consumers, partners and developers everywhere," he added.

Page also gave assurances about what this would mean for other handset and tablet manufacturers. Android will remain an open platform and Motorola Mobility will be run as a separate business, he said.

Google's move into device manufacturing will add a further level of competition and will increase the pressure on the likes of Nokia and RIM, the maker of the Blackberry.

Nokia recently threw its lot in with Microsoft in a bid to turn around declining market share, while Blackberry now faces real competition for business customers, which were once its reserve, from the iPhone and a range of Android-powered devices.

The really compelling element of this deal is though the prospect of what will effectively by a Google tablet.

Despite early scepticism, Apple's iPad has been a huge success, prompting rival manufacturers to launch very similar products.

Will Motorola Mobility enable Google to put together a tablet that can truly compete with the iPad? Only time will tell.