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UPDATED

Still digesting the Google buyout of Motorola Mobility, but this much seems reasonable:

-- Google wants to be more like Apple, owning an entire ecosystem around Android. Google has done, on balance, a brilliant job with Android. But only Apple is Apple.

-- Google's claim that Moto will kept at arm's length regarding Android -- that this will not affect its relations with other handset makers -- is a fantasy. We've just learned that the most important hardware company for Android is the one Google will own.

-- The upside for Android users is that the balkanization of Android, which Google was already trying to address, may lessen. Google/Moto will presumably sell a set of phones that gives customers more freedom in how they operate their own devices.

-- Samsung and HTC must be absolutely furious, and they should be. They have been, with Moto, by far the most ardent supporters of Android. They can no longer trust Google. So call me highly skeptical of the pious "this is great news" statements from these companies.

-- Microsoft must be ecstatic. This gives the Windows mobile platform a new lease on life. Microsoft could now position it as the only major OS that is platform-agnostic (unless, as a commenter notes, Microsoft buys Nokia).

-- Larry Page said this move was in part about patents. But Google didn't need to buy the entire company to get more protection in the patent-extortion game that now prevails in the technology business. It could have just bought part-ownership in the patents.

-- Cory Bergman makes an interesting case that this is also a major TV play. I've been using Google TV (the now-discounted Logitech Revue) and find it pretty good. If Google TV becomes part of set-top boxes it could be an interesting combination. However, the cable and satellite companies will have a lot to say about this, and they consider Google a scary competitor, not a partner. Cory's story: http://www.lostremote.com/2011/08/15/why-googles-motorola-acquisition-is-a-huge-tv-play/
Google is delving into the Android hardware business and is buying Motorola Mobility for $12.5 billion. The news is a shocking turn for the fast-growing Android ecosystem, which was built on Google's ...
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42 comments
 
Check the links in this article for more:
http://abnormalreturns.com/the-ultimate-google-motorola-mobility-linkfest/

If you have access, read FT Alphaville blog:
http://ftalphaville.ft.com/blog/2011/08/15/653181/presenting-the-google-phone-analysts-react/

Including one Nomura quote:

"At USD 40 per share, MMI shareholders are being offered a price that is 82% above our USD 22 target price. In effect, it values MMI’s patent portfolio at USD 6bn and the handset division as a long-term sustainable business. We would recommend that shareholders accept this bid given the likely absence of rival bidders and the size of the acquisition premium".
 
My first thought was that this was to make it easier to compete with the iPhone, but the scuttlebutt I hear is that Google did not buy Motorola for the hardware. They bought them for the patent portfolio. This gives Google a huge array of handset patents which can be used to defend themselves, and other Android handset makers, from patent trolls and from Microsoft and Apple.
 
Agree with all these points. Well said.
 
When smart companies like Google buy companies like Motorola, and the common wisdom is that they're doing it for patent protection, well then the common wisdom is messed up. This patent mess is a disaster for innovation.
 
Android manufacturers were taking a pounding from Apple and others, so Google is showing it is serious about the phone business, and now has patents of its own to assert. I don't think they will favour Motorola over other manufacturers, because that restricts their market growth.
Joe C
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Microsoft could now position it as the only major OS that is platform-agnostic.

Not if they buy Nokia.
 
I can't see Google having any interest in hardware... it's not their game. It is a strategic purchase of patterns to safeguard the Android OS, thus protecting Samsung and HTC from further attacks from Apple in regard to their Android tablets/mobiles
 
Dan-

Microsoft buys RIM-let's them maintain the enterprise.
Microsoft merges Nokia-manufacturing, Asia and emerging markets

Thus the world has three players--Microsoft, Apple and Google, followed by a bunch of losers--HP is the odd man out.

Andy
 
I'm going to be interested to find out how the emotional/logistical aspects of the merger work out. I have been involved in so many bad, bad mergers that foundered as much because of cultural differences as anything else. One of the burning issues is what happens in the inevitable infighting, and whether the engineers/managers in the buying company win all the fights because of their knowledge of how to pull strings.
rone
 
Dan: If Samsung and HTC trusted Google before this, they were complete suckers.

Also, even if you're right about this giving M$ a new lease on life, don't worry, they'll blow it soon.
rone
 
+Alex Puchianu, see Balkanization on Wikipedia, especially this part: "Balkanization is sometimes used to refer to the divergence over time of programming languages and data file formats (particularly XML)." There are multitudes of versions of Android due to multiple carriers and phone architectures which sometimes complicates writing Android apps.
 
Dan, under the circumstances, what real choices does Google have, than to acquire patent portfolios?
 
They obviously have to acquire patents, but is this the most efficient way? (Maybe they'll sell off the hardware business, as another commenter suggests, and just stick with the IP.)
 
The people saying this helps HTC and Samsung are most probably correct.

The thing the naysayers like +Ron Echeverri might not understand is that Mot Mobility was already struggling and was probably about to go thermonuclear with its patents. Any downside was going to happen anyway for Samsung, HTC, et al.

The potential upside is that now these patents can be used to protect Android implementers from the likes of Microsoft and Apple.

+Dan Gillmor I disagree that google wants to own the entire ecosystem. Google doesn't want to have to ship physical product. It's all they can do to keep up with customer service on G+ real-name issues; they don't want to have to do real customer service on real things.

Finally your idea that they could buy part interest in the patents is difficult. Any lawyer worth his salt can tell you that patent part ownership gives both owners the right to do whatever they want. If Mot partially owned the patents, they could license to Apple and Microsoft, and then where would google be?

As far as whether this is the "most efficient way" to acquire the patents, who knows? But I'm sure google has studied the portfolio extensively. Maybe there is something there that they can hurt Oracle with...
 
Quite a bit faster to buy patents in bulk than to spend years trying to get them past the USPTO.
 
+James Love if we know anything about patents, it's that the USPTO issues them willy-nilly -- with little or no regard for prior art, uniqueness or anything else. The system is a complete disaster, and it's a giant tax on the public that no one sees except in circumstances like this, and even then it's still not an obvious tax.
 
To expect Samsung and HTC to be furious is 'common wisdom'. Common wisdom dictate that you should not 'compete' with your partners even if their long term plans are less than benevolent for you. However nothing is worst than adhering to common wisdom under extraordinary challenges. That will be boxing yourself. Extraordinary circumstances require extraordinary solutions. I'm sure Samsung and HTC would understand this though I would also expect rightly a cautionary attitude to Google. But for now, deal with the current problem first then the other issue later.
 
Good points. With regards to platform agnosticism, I'm pretty sure that by 2014, Microsoft will own Nokia. Controlling the hardware - at least a “reference platform” - ist just too tempting, and with a 1.6% market share - see http://redmondmag.com/articles/2011/08/11/windows-phone-market-share-drops.aspx - what do they have to lose?

As for the messy patent system that forces Google & Co. to buy the companies wrapped around the IP ... Google may help Android with this move in the short term, but the fact that companies now have to sail around thousands of patents if they want to build devices for the mobile Internet ecosystem cannot be good for innovation. As you just said, it's an invisible tax, and it's being used to protect the established players.
 
I don't think the entire problem is the low quality of patents. That's a nuance, but probably not the most important problem for Google right now. Some patents are probably real inventions, on a very complex technology platform. The reform agenda should not only be about eliminating patents (good luck with that one), but rather challenging more aggressively the notion that patents=exclusive rights, particularly in cases where each patent is such a small part of the value of the product. Most of the world has at least compulsory licensing statutes. In the US, for this type of technology, we have compulsory licensing only through the injunction proceedings, which are fairly random in outcomes. Also, worth noting, is that the White House/USTR is pushing very aggressive new global norms for patent damages in the TPPA trade agreement (next round of negotiations are in Chicago next month).
 
Agreed with this completely... Google just ruined a great position they were in. So sad, too bad. Hardware is not the place to be, just look at Microsoft versus IBM.
rone
 
That was 30 years ago, +John Plasterer. The situation is not the same, and there are a lot more mobile phone owners now than PC owners then.
 
John, I don't think Google ruined its position. This might well work out. I'm skeptical about the vertical integration stuff, but it's certainly done well for Apple...
 
Google can use Motorola's patents and cross license them with Samsung and HTC. Google then gets more patents and they get more patents as well. And then to LG, SE, Huawei and ZTE. This creates an even bigger patent pool.
 
Android succeeded because it is open and widely embraced by hardware makers. Google knows this. It is my feeling that this is primarily a patent play. I do not think that Google is trying to be Apple and I would not be surprised if, down the road, Google spins off MM and keeps the IP. At the same time, I can also understand some anxiety among Google's partners.
 
The assertion that "Samsung and HTC must be absolutely furious, and they should be..." makes all kinds of potentially incorrect assumptions about the relationships between Google and those companies, past, present, and future.
 
The problem is that Motorola Mobility is worthless without its patent portfolio. No way would Motorola split them up. If Google could have bought the patents alone, they would have.
 
From what I've been reading on Twitter, the less obvious part of the deal is Motorola's STB business. That might be what Google needs to get Google TV off the ground. They're already doing Honeycomb on Google TV, so that might make Ice Cream Sandwich more interesting. One OS for smartphones, tablets and TVs?
 
Cool comment from one Kevin Snyder here:
http://esr.ibiblio.org/?p=3597

"Interesting times ahead. Here’s a really wild speculation…

"(1) Before divesting the smartphone hardware segment, Googlola introduces a smartphone with a replaceable radio, sells the radio separately so the phone is a true multicarrier unit.
"(2) No US carrier touches it with a ten foot pole or allows it on their network.
"(3) Googlola files a Carterphone-based complaint with the FCC.
"(4) The carriers are reduced to dumb pipes selling capacity based on the actual cost of production.

"I can dream…"

May it be so.
 
Depends what they do with it.

They could license the patents to any Android manufacturer for free, with the stipulation that the manufacturer must include google search and apps, and must commit to keep their version of Android current (releasing with 90 days of an official Android release).

This would not only provide significant patent air cover for those manufacturers, it would also reduce fragmentation.

A lot depends on how/if they compete on the hardware front. They could do so, of course, they could also spin it out and tell it that it has to stand on its own.

Samsung/HTC/Sony-Ericsson could be big winners here. Or not. Up to Google.

Very interested to see how this impacts GoogleTV.
 
The $12.5B price tag ignores the fact that MMI has over $3B in cash and zero LT debt.

Also ignored is the fact that in addition to the mobile handset business MMI has a set top box business which is on track to generate over $3.5B in annual revenues (and a small profit) and could be used to drive adoption of GoogleTV.
 
+Dan Gillmor I dispute this sentence:
"Google/Moto will presumably sell a set of phones that gives customers more freedom in how they operate their own devices."

More than Apple, perhaps, but given G's attitude to end users of late, are you still sure they are all about openness and freedom?
 
+Dan Gillmor "It could have just bought part-ownership in the patents."...why own part of it if, with little effort, you can own the whole thing with dessert :)
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