Google buys Motorola to improve patent portfolio for $12.5B

[FlameOn]

Pretty big news, google just bought Motorola and all their huge patents portfolio on everything mobile technology related. I suspect we'll see the lawsuit situation with Android to get interesting.

http://news.cnet.com/8301-1035_3-20092362-94/google-to-buy-motorola-mobility-for-$12.5b/

[Russic]

Whoa. Finally getting some hardware backing. 12.5 billion... that's a lot of adsense.

[simmer2]

Interesting move after the talk of all the patents...it's sad that a company has to buy another just for patents so they can be protected from lawsuits.

[Rathji]

That is huge.

[Azure]

Huge, huge, huge.

Bold move too. Motorola has a huge number of patents as well.

[Azure]

This is where Motorola comes in. The company has patent portfolio that includes more than 17,000 approved patents. And it has another 7,500 patents filed and pending approval. This portfolio of patents is substantially larger thant he group of patents that was sold from Nortel Networks.

Read more: http://news.cnet.com/8301-30686_3-20092399-266/google-just-bought-itself-patent-protection/#ixzz1V6g3PxC5

Apple, Microsoft and RIM just got kicked in the ass.

[FlameOn]

Funny thing is no one else saw this coming. Do not want to play poker against these guys at all.

Hopefully this forces cross licensing deals on everyone and we have less stupid lawsuits costs that get passed onto the consumer.

[GreatWhiteEbola]

I might add that Motorola recently split into 2 entities (Dec 2010); Motorola Solutions, wi-fi, 2-way radio, EDA devices (formerly Symbol) etc. and Motorola Mobility, cell phone related concerns, digital boxes, and modems. Google is now the owner of Motorola Mobility.

I suspected that Motorola was shopping the mobility side of things when they split the groups, in fact the split was supposed to happen in 2009. They seemed to hold off until the market was ready for the sale of Motorola Mobility, and it seems that a buyer has emerged.

[Barnes]

Does purchasing Motorola help? Yes, but they have already made 3 very large enemies.

Through the Nortel purchase, Apple and Microsoft now have plenty of patents to go after Google and their partners for networky/antenna/cell technology stuff as well. Apple, Microsoft and Oracle have plenty of Linux related patents through their acquisition of the Novell patents which the could use to go after Android OS related stuff. Microsoft and Apple both have numerous UI and OS related patents and will continue to harass Google by going after their partners. Oracle can do some real damage by being the holder of Java patents.

Google is in a very precarious situation and I can easily see it going this way:

Google buys Motorola Mobility
Google transfers patents to themselves
Android OEMs grow tired of paying money to Microsoft and soon Apple and Oracle
Samsung and HTC feel abandoned in partnership and focus more on WP7
Motorola Mobility continues to lose money
Google sells Motorola Mobility minus patents for peanuts

[Azure]

Well I certainly don't see it going that way.

Samsung and HTC won't abandon a partnership that has made their profits skyrocket. 550,000 activations per day is incredible.

The bigger picture here is that Google is now directly competing with Apple in that hardware field.

If you look at the patent picture, the patents that Motorola owned are apparently even higher profile than the patents that Nortel owned. So I could easily see the game swinging back in Google's favour.

[kermitology]

Well I certainly don't see it going that way.

Samsung and HTC won't abandon a partnership that has made their profits skyrocket. 550,000 activations per day is incredible.

The bigger picture here is that Google is now directly competing with Apple in that hardware field.

If you look at the patent picture, the patents that Motorola owned are apparently even higher profile than the patents that Nortel owned. So I could easily see the game swinging back in Google's favour.

I wouldn't be quite so quick to jump to that conclusion. Here is one possible scenario: http://mikecanex.wordpress.com/2011/08/15/google-pulls-a-zune/

Also.. this is kind of creepy:
http://www.google.com/press/motorola/quotes/

[Azure]

I guess it could go either way, although I don't see Google abandoning their partners that way. HTC, Samsung and LG have competition between themselves that is driving the smartphone war. 550,000 activations per day is largely because of the work they have done.

Either way, Google is now the #1 manufacturer of set top boxes in the US. Google TV might actually do something now.

[GreenTeaFrapp]

I don't see what alternative the other Android mobile phone makers have.

They're better off competing with Google on the hardware side than going to an OS that doesn't have the market penetration of Android.

And Google's already had their own hardware before with the Nexus. It didn't prevent others from bringing out Android phones, it just forced them to improve their phones.

[MarchHare]

Isn't Google's smartphone OS strategy akin to Microsoft's PC OS strategy? That is, they create and supply an OS to third-party hardware partners but don't actually compete in the hardware field themselves (as opposed to Apple and RIM who create both the OS and the hardware). What possible gain is there to abandon that strategy now, considering that history has shown time and again that the system available to the greatest number of hardware manufacturers tends to win the most marketshare even if competing technologies are superior (e.g. Mac vs. DOS/Windows, Betamax vs. VHS, etc.).

[Barnes]

I am excited to see what will happen to Motorola's cordless phone and baby monitor product lines though.

[Azure]

Isn't Google's smartphone OS strategy akin to Microsoft's PC OS strategy? That is, they create and supply an OS to third-party hardware partners but don't actually compete in the hardware field themselves (as opposed to Apple and RIM who create both the OS and the hardware). What possible gain is there to abandon that strategy now, considering that history has shown time and again that the system available to the greatest number of hardware manufacturers tends to win the most marketshare even if competing technologies are superior (e.g. Mac vs. DOS/Windows, Betamax vs. VHS, etc.).

You've just pointed out exactly why Google won't let it become a problem.

[MickMcGeough]

Not sure if this has been pointed out, but Google didn't buy the whole company.

[Barnes]

Also pretty slick that they bought a company that has a lot of h.264 patents yet have been previously promoting WebM as a standard because h.264 has too many perceived licensing issues.

[GreatWhiteEbola]

Not sure if this has been pointed out, but Google didn't buy the whole company.


Yep, post #8.

[Hemi-Cuda]

Isn't Google's smartphone OS strategy akin to Microsoft's PC OS strategy? That is, they create and supply an OS to third-party hardware partners but don't actually compete in the hardware field themselves (as opposed to Apple and RIM who create both the OS and the hardware). What possible gain is there to abandon that strategy now, considering that history has shown time and again that the system available to the greatest number of hardware manufacturers tends to win the most marketshare even if competing technologies are superior (e.g. Mac vs. DOS/Windows, Betamax vs. VHS, etc.).

Google is keeping Motorola as a separate entity, as an end consumer we won't notice any difference. Google is even going so far as to stress that Motorola won't have any advantage when it comes to bidding to create the new Nexus (Google's flagship Android phone)

http://www.androidcentral.com/motorola-wont-have-exclusive-nexus-devices-andy-rubin-says

another big thing to note is that unlike other software or hardware licenses, Android is open source. hardware manufacturers don't pay Google anything to put Android on their devices, unlike Windows. this move by Google doesn't impact their business at all, and in fact all the major Android hardware makers have already come out in support of Google's move as this will help protect them from the vultures at Apple and Microsoft trying to sue them into oblivion

[Azure]

Not sure if this has been pointed out, but Google didn't buy the whole company.

I think the set top boxes part of the company was under Motorola Mobility so they did indeed get that.

[Barnes]

I think the set top boxes part of the company was under Motorola Mobility so they did indeed get that.

Phones, tablets, headsets, nav systems, cordless phones, baby monitors, modems, routers, and DCTs are all part of Motorola mobility.

Essentially all Motorola consumer electronics.

[Barnes]

Nm

[Red]

Google is keeping Motorola as a separate entity, as an end consumer we won't notice any difference. Google is even going so far as to stress that Motorola won't have any advantage when it comes to bidding to create the new Nexus (Google's flagship Android phone)

http://www.androidcentral.com/motorola-wont-have-exclusive-nexus-devices-andy-rubin-says

another big thing to note is that unlike other software or hardware licenses, Android is open source. hardware manufacturers don't pay Google anything to put Android on their devices, unlike Windows. this move by Google doesn't impact their business at all, and in fact all the major Android hardware makers have already come out in support of Google's move as this will help protect them from the vultures at Apple and Microsoft trying to sue them into oblivion

In the end the $$$ will decide how Moto is used by Google. Everyone is kissing their butts today, but in the end if the investors want a Moto phone with android Google will do it even if it comes at HTCs expense.

Did Google send the OEMs a memo with a message? All these responses are identical.

"We welcome today's news, which demonstrates Google's deep commitment to defending Android, its partners, and the ecosystem." --J.K. Shin, president of Samsung's Mobile Communications Division
• "I welcome Google's commitment to defending Android and its partners." --Bert Nordberg, CEO of Sony Ericsson
• "We welcome the news of today's acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem." --Peter Chou, CEO of HTC
• "We welcome Google's commitment to defending Android and its partners." --Jong-Seok Park, CEO of LG Electronics' Mobile Communications Company


Also, Android is not open source. Google excecutives call it open,
but not open source. Unless your definition of open is that they are available on more than one manufacturers hardware.

[FlameOn]

Also, Android is not open source. Google excecutives call it open,
but not open source. Unless your definition of open is that they are available on more than one manufacturers hardware.

Android is indeed open source. Not sure where you're getting your information from, I pulled the source code for Nexus S and Samsung Galaxy S 2.3.3 Android release yesterday. The only exception were a couple hardware drivers that Samsung didn't provide with the package for the Galaxy S. These were provided directly from Google and downloadable from Samsung.

[FlameOn]

Phones, tablets, headsets, nav systems, cordless phones, baby monitors, modems, routers, and DCTs are all part of Motorola mobility.

Essentially all Motorola consumer electronics.

A lot of good for the consumer could come out of a deal like this. Think of all the Shaw cable boxes made by motorola for example, maybe something like an improved version of Google TV integrated into a set top box could be possible.

Another thing that could pop up, Google voice power VOIP phones, I would love to have something like that.

[SebC]

Man, never thought Google would be a hardware make before a PC OS maker.

If they can apply their culture of innovation to Moto hardware, the results could be awesome.

(Yeah, I know they've basically said they won't.)

[Red]

Android is indeed open source. Not sure where you're getting your information from, I pulled the source code for Nexus S and Samsung Galaxy S 2.3.3 Android release yesterday. The only exception were a couple hardware drivers that Samsung didn't provide with the package for the Galaxy S. These were provided directly from Google and downloadable from Samsung.

Alright, the OS is, but the core apps and their development is not. Google controls it all.

[FlameOn]

Alright, the OS is, but the core apps and their development is not. Google controls it all.

That's all Android is, an OS and platform for phone makers to do what they want with. Google Earth is not open source, neither is google maps, they don't need to be for phone makers to develop a product. Really what core application are you referring to?

Google controls the development yes, but the source code is all there for everyone to see. That is by definition open source. Just because someone can make application closed source on an open source platform does not make the platform itself closed source.

[Azure]

Man, never thought Google would be a hardware make before a PC OS maker.

If they can apply their culture of innovation to Moto hardware, the results could be awesome.

(Yeah, I know they've basically said they won't.)

I'm pretty sure Motorola will be competing to make the best phone possible. Google just bought themselves 20% of the smartphone market in the US. Which is huge.

The big thing will be if Google will force Motorola to compete against HTC, Samsung and others on a level playing field.

Which I think they will.

Operating it as a separate company could easily work very well, and Motorola could easily get back to having $10 billion dollar quarters.

[Hemi-Cuda]

Alright, the OS is, but the core apps and their development is not. Google controls it all.

um, so? every app that Google makes has alternatives available on the market, they don't force you to use them. it's up to the manufacturers and carriers to decide what apps get included on their phones (some have even swapped out Google search for Bing instead)

the OS itself is completely open with anyone able to download the source code for free. that's why you have so many custom built ROMs like Cyanogen, they build directly from the stock code that gets released on the Nexus phones (other manufacturers make their own tweaks. HTC has Sense, Motorola has Blur, and Samsung has TouchWiz, which are NOT open source). that's why no one will be jumping ship to support a dead on arrival OS like Windows Phone 7, they already have a large userbase already in place and switching would just cost them more money and lost customers

[Hemi-Cuda]

I'm pretty sure Motorola will be competing to make the best phone possible. Google just bought themselves 20% of the smartphone market in the US. Which is huge.

The big thing will be if Google will force Motorola to compete against HTC, Samsung and others on a level playing field.

Which I think they will.

Operating it as a separate company could easily work very well, and Motorola could easily get back to having $10 billion dollar quarters.

i honestly don't think Google is interested in telling Motorola what direction to take. the primary reason for the deal is still the patents, the bonus is that Google will now have an easy way to get more Google branded hardware out in the market in areas where they don't yet have a big presence (Google TV is an excellent example)

[chemgear]

Well, here is two years of hindsight.

http://www.theverge.com/2013/10/21/4853808/google-motorola-losses-moto-x

Over the last eight months, losses at Google's Motorola Mobility have accelerated despite three rounds of layoffs that slashed around 6,000 workers. The division is now on pace to bleed $1 billion a year (http://www.theverge.com/2013/10/17/4849472/google-earnings-q3-2013) out of the search giant’s bank account. And yet Google's stock topped a record high $1,000 a share (http://www.theverge.com/2013/10/18/4852158/google-stock-breaks-1000-for-the-first-time) today as investors showed renewed confidence in the company's future. The questions raised back in April seem more pertinent than ever: why exactly did Google buy Motorola? We’ve got another quarter of data and a new device to look at, but the answer still isn’t pretty.
"I’m still scratching my head about why they did it."

Does a money pit like Motorola have a major impact on Google’s bottom line? In a lot of ways, the answer right now is no. Despite the losses, Google is profitable overall, and its cash on hand has grown steadily. But if Motorola continues to slide, Google may eventually be forced to write down the cost of the $12.5 billion acquisition (http://www.theverge.com/2012/5/19/3030982/google-acquires-motorola-mobility-full-story)

Patents were another big part of the rationale behind the Motorola purchase, with Google telling investors (http://www.google.com/press/motorola/) it would help to protect the Android ecosystem from competitors’ lawsuits. But so far that intellectual property hasn’t added up to much. In a licensing dispute with Microsoft, the patents were ruled to be worth just $1.7 million a year, a far cry from the $4 billion Motorola demanded of Microsoft (http://www.google.com/url?q=http%3A%2F%2Fwww.theverge.com%2F2013%2F4%2F2 5%2F4267830%2Fjudge-rules-motorolas-patents-arent-worth-the-4-billion-a-year-it-wanted-from-microsoft%2Fin%2F2795023&sa=D&sntz=1&usg=AFQjCNF8jIesdwieHA-jRkD0EzZ-FrEqRg) in 2010. Motorola’s patents also failed to win a decision with the ITC that would have blocked the import of the iPhone.

Unless Google's overall performance shows a serious slump, it may not be forced to make hard decisions about Motorola any time soon (Microsoft, for instance, took five years to write off its money-losing acquisition of aQuantive). But from the perspective of return on investment, Motorola’s a long way off from showing signs of life. "The new products haven’t been a flop, it’s far too early to call them a failure," says Greengart. "Financially speaking, however, Motorola hasn’t been a flop. It’s been a disaster."

[TorqueDog]

I'm hoping our acquisition of Nokia goes much better than Google's acquisition of Motorola.

[Hack&Lube]

I'm hoping our acquisition of Nokia goes much better than Google's acquisition of Motorola.

You work for Microsoft?

[nfotiu]

Well, here is two years of hindsight.

http://www.theverge.com/2013/10/21/4853808/google-motorola-losses-moto-x

Over the last eight months, losses at Google's Motorola Mobility have accelerated despite three rounds of layoffs that slashed around 6,000 workers. The division is now on pace to bleed $1 billion a year (http://www.theverge.com/2013/10/17/4849472/google-earnings-q3-2013) out of the search giant’s bank account. And yet Google's stock topped a record high $1,000 a share (http://www.theverge.com/2013/10/18/4852158/google-stock-breaks-1000-for-the-first-time) today as investors showed renewed confidence in the company's future. The questions raised back in April seem more pertinent than ever: why exactly did Google buy Motorola? We’ve got another quarter of data and a new device to look at, but the answer still isn’t pretty.
"I’m still scratching my head about why they did it."

Does a money pit like Motorola have a major impact on Google’s bottom line? In a lot of ways, the answer right now is no. Despite the losses, Google is profitable overall, and its cash on hand has grown steadily. But if Motorola continues to slide, Google may eventually be forced to write down the cost of the $12.5 billion acquisition (http://www.theverge.com/2012/5/19/3030982/google-acquires-motorola-mobility-full-story)

Patents were another big part of the rationale behind the Motorola purchase, with Google telling investors (http://www.google.com/press/motorola/) it would help to protect the Android ecosystem from competitors’ lawsuits. But so far that intellectual property hasn’t added up to much. In a licensing dispute with Microsoft, the patents were ruled to be worth just $1.7 million a year, a far cry from the $4 billion Motorola demanded of Microsoft (http://www.google.com/url?q=http%3A%2F%2Fwww.theverge.com%2F2013%2F4%2F2 5%2F4267830%2Fjudge-rules-motorolas-patents-arent-worth-the-4-billion-a-year-it-wanted-from-microsoft%2Fin%2F2795023&sa=D&sntz=1&usg=AFQjCNF8jIesdwieHA-jRkD0EzZ-FrEqRg) in 2010. Motorola’s patents also failed to win a decision with the ITC that would have blocked the import of the iPhone.

Unless Google's overall performance shows a serious slump, it may not be forced to make hard decisions about Motorola any time soon (Microsoft, for instance, took five years to write off its money-losing acquisition of aQuantive). But from the perspective of return on investment, Motorola’s a long way off from showing signs of life. "The new products haven’t been a flop, it’s far too early to call them a failure," says Greengart. "Financially speaking, however, Motorola hasn’t been a flop. It’s been a disaster."

The moto x seems like a pretty nicely designed phone. Great size, nice aesthetics, all day battery life, good durability, is said to run android smoother than any other phone, great radios and call quality, the low power sleep display stuff is pretty cool too. Only the camera really stops it from being the perfect phone. Still, it would be top of my list if I was to get something right now. It is nice to have someone pushing Samsung and their ever growing, good but un-inspired phones.

[Anduril]

The moto x seems like a pretty nicely designed phone. Great size, nice aesthetics, all day battery life, good durability, is said to run android smoother than any other phone, great radios and call quality, the low power sleep display stuff is pretty cool too. Only the camera really stops it from being the perfect phone. Still, it would be top of my list if I was to get something right now. It is nice to have someone pushing Samsung and their ever growing, good but un-inspired phones.

They've also been putting out a few great marketing videos on youtube. Their presence could definitely be bigger though especially with the recent price drops.

Not to mention, less carrier exclusivity. I would recommend the crap out of the Moto X to anybody who would listen if it wasn't only on Rogers/Fido.

[TorqueDog]

You work for Microsoft?Si señor.

[Azure]

“The tax benefits of the deal make what was a good deal into a great deal,” said Robert Willens, a New York accounting and tax expert. He estimated that through the acquisition, Google can expect to reap $700m a year in tax deductions from future profits each year through 2019. Google also will be able to immediately reduce its taxes by $1bn due to Motorola Mobility’s US net operating loss, and by a further $700m due to its foreign operating loss, he said.

Adding all of that up and Google will actually, in the end, pay around $1.5 billion for Motorola as a handset maker and that great stack of patents. This still might not be a good deal: too early to tell as yet. But that’s certainly a very different deal from paying $12.5 billion for the same two things.

http://www.forbes.com/sites/timworstall/2013/04/29/why-google-did-buy-motorola/

[chemgear]

http://www.forbes.com/sites/timworstall/2013/04/29/why-google-did-buy-motorola/

That is a very good point to consider as well.

[Azure]

And the net operating loss might even keep increasing which increases the tax deductions. Suddenly Google is walking away from the deal having essentially paid zero for Motorola simply because they were able to keep more of their profits.

After 10 years, sell it off for a few billion and boom, profit. Assuming they can't make money with it. I think they can. But right now I don't think they care about profit margins simply because it helps them pay less taxes.