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Google Buying Motorola Mobility

Provides access to patents and home TV market

August 15, 2011
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The hot wireless news this summer will very likely be the purchase of Motorola Mobility by Google. Most experts think this is not about hardware but acess to their intellectual property and to a lesser extent, access to the consumer TV market.

Here are some excerpts from ABI Research's comments:

Google agreeing today to buy Motorola Mobility Holdings Inc. for $12.5 billion gives the search giant a more significant direct involvement in the design and production of mobile phone hardware and shores up a valuable intellectual property portfolio during a time when legal maneuvering through patent holdings is plaguing the Android market.

Beyond mobile phones and media tablets, Motorola Mobility has a healthy business in the digital home, namely broadband cable modems and set-top boxes. Its strategy has been to promote a “TV everywhere” solution. Google, in contrast, had its foray into this space with Google TV seen widely as an experiment. A tie-up between Google and Motorola could give Google the expertise it needs to be taken seriously and gain an eventual foothold in content deliver to the home.

PC Magazine has the following interesting comments:

To be sure, there are advantages to building your own hardware. Apple's ability to design, code, build, and even sell its products at retail have made it one of the most valuable tech companies in the world. When Google released products like the Nexus S, you can see the company appreciates the potential there. If this deal goes through, I imagine Motorola will become the exclusive builder of pure Android devices. This will bring Google some economies of scale and no doubt some better margins on the products it sells, but all this is secondary to acquiring Motorola's patents.

The math is stark. Motorola has 17,000 patents, Google has about 1,000. As Google’s CEO Larry Page said in a blog postannouncing the deal, "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."

PC Magazine ended the article with the following:

Much more than a hardware play, this deal is about defending the Android platform from patent attacks. For most companies, $12.5 billion is a ridiculous price for patent protection, but remember Google has about $39 billion in cash on hand. With that kind of bank, it could keep shopping. (Eastman Kodak is reportedly putting 1,000 of its digital imaging patents up for sale.) But I really hope it doesn't.

The stunning $4.5 billion auction of Nortel patents won by Apple, Microsoft, and Research in Motion added fuel to this patent hunting craze. Now that Google has its own arsenal, I can only hope a cooling off period prevails. (A lot to hope for in August, I know.) Patent trolling is about protecting past innovations not generating new ones. Instead of filing obscure lawsuits, these companies should focus their energies and considerable resources on building better products.

An excerpt from the Google Blog says it all about patent protection:

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.

And a final summary of the purchase by Strategy Analytics:

According to Richard Guppy of Strategy Analytics’ Global Forces Program, "The buy provides Google with an immediate fix to its IPR deficiency which will help it fight patent litigation, and will be welcomed by Motorola shareholders fearing further reductions in market share and hence share price. But there is an inherent conflict between Google’s goal of generic platform creation and its acquisition of a specific device maker. Longer term it doesn’t look good for the Motorola brand: Google may chew off the parts of Motorola it wants – notably its IPR and parts of its engineering staff – and be obliged to spit out what remains."

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