Google Spends $12.5 Billion To Buy Motorola Mobility... And Its Patents

from the keep-an-eye-on-the-patents dept

Lots of talk today about Google's surprise decision to buy Motorola Mobility for $12.5 billion. The deal is leaving some people scratching their heads, because it seems like a business that Google had always stayed out of, preferring to provide the tools (Android) for others to go and do things. But I'm betting a big part of this deal is because of Motorola's patents. You have to think that a big chunk of mobile device and mobile OS-related patents are likely included in the deal, and it gives Google something else to use in response to the Nortel patents going elsewhere. Of course, it may cause some other problems, as Motorola Mobility competitors, who also work with Google, start wondering if they should keep using Google as a partner. It also makes you wonder what Google will really do with Motorola Mobility. It would be nice to see a Google-like approach from the hardware side, but I just don't see that as likely. My guess is that the hardware side will fizzle, but Google will still be happy it has the patents.


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  1.  
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    The Incoherent One (profile), Aug 15th, 2011 @ 3:23pm

    Hardware Patents

    I am seeing this as stage2 of Google stands up for its Hardware vendors.

    Google has already said that it is going to defend or assist HTC in their patent war with apple. I would imagine that the would do the same thing for Samsung given that the two of them make the vast majority of Android devices. Once the sale is finalized it gives Google access to Motorola's vast patent library to find weapons which Samsung, HTC, and Google itself may use to defend themselves against Apple and any future litigation.

    As to the hardware, it has been stated that while Google would own them, it would not be integrated as with other Google acquisitions. They would remain separate, but no undoubtedly have influence from Google on how to change somethings about their handsets and tablets. I view it as a good thing.

     

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  2.  
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    Krish (profile), Aug 15th, 2011 @ 3:40pm

    all in

    It could be viewed as Google showing its hardware vendors that it has some skin in the game. I'm sure Google/Motorola will be a prime target for patent attacks. Thus Google will be in the trenches fighting patent attacks shoulder-to-shoulder with its vendors.

     

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  3.  
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    Anonymous Coward, Aug 15th, 2011 @ 3:44pm

    If Google is sincere about using their patents for defensive reasons only, the other handset makers should be very pleased about this move as Google would presumably freely or cheaply license the Moto patents.

    Samsung and HTC, both currently staring down the threat of injuctions stemming from the legal wranglings of Apple could benefit from having a reinforced ally in Google.

     

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  4.  
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    Glen, Aug 15th, 2011 @ 3:45pm

    Sad state

    This goes to show you how pathetic our patent system is. A company that just wanted to focus on software now having to purchase a cellular manufacturer in order to use patents.

     

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  5.  
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    blaktron (profile), Aug 15th, 2011 @ 4:00pm

    I'm pretty sure it went down (much simplified) like this:

    Google went to Motorola (who, with mid 90s acquisitions own a good chunk of the 2g patent thicket) and said "listen, you need to step up and attack Apple to help out Samsung and HTC with these suits" and Motorola responded "Are you crazy? Those are our primary competitors. We are looking golden here". And Google, honestly not understanding how Motorola doesn't see the importance of defending the ecosystem in the early days, offered to buy the patents. Motorola would have, of course, refused, as they need those to defend themselves from Apple. Then Google offered to buy the entire mobile business unit, which shocked the Moto execs. So they did it.

    And now we will see Google prime up and blast Apple away. Although Apple may have pioneered the current smartphone environment, they sure as hell didn't invent the cell phone, and ultimately, that's what they are selling.

     

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  6.  
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    blaktron (profile), Aug 15th, 2011 @ 4:02pm

    Re:

    And as a side note, look at the incredible investment Google has made in Android, knowing that its going to pay out in the WAY long run if it becomes the Windows of the smartphone, but WOW. You dont usually see public companies operate with that incredible foresight. Thats like 125% of their entire net profit of 2011, which for a 10 year old company is crazy. More than 20% of every penny they've made as a company to defend a product that they give away for free. And NO ONE is saying its stupid, finally.

     

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  7.  
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    cc (profile), Aug 15th, 2011 @ 4:10pm

    I think it's pretty clear by now that Google's strange bids on the Nortel patents were a diversionary tactic -- they were driving the price up to stick it to Apple and Microsoft. If that was the case, their strategy worked magnificently.

    Also, I bet the Motorola Mobility deal was secretly in the works since long before now. Somehow I don't think you can put together a multi-billion deal in a week...

    And as for Motorola's hardware division, I doubt Google will try to compete with its partners to any serious degree. When it comes to Google, never forget that they are not making Android to sell an OS but to use that OS to sell ads!

    On a relevant note, I heard that MM's patent portfolio may also contain a bunch of video-related patents, but haven't been able to confirm. Any chance this could open a new front on the WebM/MpegLA front as well?

     

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  8.  
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    out_of_the_blue, Aug 15th, 2011 @ 4:12pm

    Where DOES Google get its money?

    http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-ta x-loopholes.html
    To save you time, through a tax dodge, Google gets a 2.4% rate, saving 3.1 billion in 3 three years. -- Leaving the rest of us to pay the bills.

    Was looking into other its other wacky projects. Google is not just a search engine. Found a long one that's interesting but slightly off-topic (it's on Google's energy plans); it ends with a pretty clear statement of gov't financing that I think is cover for much more:
    http://www.wired.com/epicenter/2009/02/googles-power-p/

    ' As part of their collaboration, GE and Google will launch an advocacy campaign in the nation’s capital to push for more federal subsidies and incentives for green power. The government, Immelt says, must be a catalyst for change. “I would say this with humility, as I sit here today,” Immelt said. “Look, I’m a lifelong Republican; I believe in free markets. But I think that, to a certain extent, we worship false idols over time. There’s been no such thing, in all the businesses we do, as one in which the government hasn’t played some role. So let’s just be clear about that.”

    On renewable power, Schmidt says much the same thing, without the humility. “I’m quite convinced that if you follow my reasoning, and if you take ad­vantage of the technological opportunities, the funding opportunities, and the apparent willingness of the U.S. government to write large checks in a series of crises,” he gushed in October, “we could do this on Monday.” '

     

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  9.  
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    eclecticdave (profile), Aug 15th, 2011 @ 4:13pm

    Re: all in

    Yeah, this definitely looks like Google throwing down the gauntlet to Apple.

    Effectively they're saying, look, we see how instead of suing us you're suing HTC and Samsung because you think they're easier to bully - but now, if you want to close down Android, you're going to have to bring the game to us.

     

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  10.  
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    Anonymous Coward, Aug 15th, 2011 @ 4:38pm

    Re: Re: all in

    Or Google brings it to Apple and force a settlement.

     

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  11.  
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    Anonymous Coward, Aug 15th, 2011 @ 5:07pm

    Buy, Fork, Divest

    Step 1: Buy company
    Step 2: Fork off everything you want
    Step 3: If you're feeling nice leave a license to use whatever in perpetuity to the other unit.
    Step 4: Sell off the other unit in the market.

    Alternate:
    Step 2: Redirect the business model to where /you/ believe the market wants it to go based on the large picture.
    Step 3: Profit???

     

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  12.  
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    Anonymous Coward, Aug 15th, 2011 @ 5:49pm

    Well, hopefully this'll be the final nail in the coffin of "Motoblur"...

     

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  13.  
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    Killercool (profile), Aug 15th, 2011 @ 6:20pm

    Re: Where DOES Google get its money?

    Just to clarify, a tax loophole is different than a tax dodge. A loophole is built into the law, and meant to to be exploited by anyone who can find it. That is why they are usually only used by people who can afford to have accountants, i.e., corporations and rich folk.
    But I have to applaud how you summarized the story worse than the 100-odd character link you used.

     

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  14.  
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    Lawrence D'Oliveiro, Aug 15th, 2011 @ 6:41pm

    I Suppose The Patent Rationale Makes Some Sense

    Interesting to see that, in the Android market, it’s the Asian companies (HTC, Samsung, LG, Huawei, ZTE etc) that are most enthusiastically embracing the open platform and getting the most success out of it, while the older Western companies (Nokia, Motorola) have found the going a bit tougher. Motorola was even making noises recently about bringing out Windows Phone 7 phones.

    So it’s a mystery why Google would want to buy a Western phone company as a going concern.

     

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  15.  
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    ScytheNoire, Aug 15th, 2011 @ 7:09pm

    Imagine

    Imagine how much good that money could do if we had a world without patents.
    Imagine all the money saved on lawyers and lawsuits if we had a world without patents.
    Imagine all the advancements we'd have if we had a world without patents.
    One can only dream.

    (Patents also interchangeable with copyright)

     

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  16.  
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    Anonymous Coward, Aug 15th, 2011 @ 10:35pm

    Reach much there Mike?

    Google appears to have purchased Motorola mostly to have a "hardware front" for it's Android operating system, one company / brand / series that is an existing name, with existing distribution and existing connections. They can walk in, toss out any other OS that might be in use (including any in house ideas) and more to a full Android effort.

    Essentially, it moves Google into the same situation as Apple, maker of both the OS and the phones they run on. They tried to do this selling "Google phones", and that pretty much didn't work out. Now they take over a company that has a solid reputation, solid hardware base, and solid industry connections, assuring that Android (and whatever might come after it) has a home for life, no matter where the rest of the companies involved go.

    Patents are wonderful things, but Google really wants to be vertical market, and this is a huge step in that direction.

     

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  17.  
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    Just John (profile), Aug 15th, 2011 @ 11:38pm

    Re: Maybe it's beyond the patent

    Actually AC,

    I work for a company making Android tablets, and I communicate with Google freely.

    Now, I am not saying I know why they took this step, but you could be right. Also, Mike could be right.

    One of the assumptions running around my company about this is so they can speed up Android development by running their own hardware for Alpha testing, instead of relying on partners like Motorola, HTC, Samsung, etc.

    In fact, someone I know who is suppose to have been moving to a new job that worked with Moto Mobility is worried about what impact this may have on the position he is suppose to be taking over.

    The other side is they could have bought it for defensive patents.

    Honestly, Mike, you, me, we are all just speculating at this point. We will first need to see what Google does with this before we can make a rational, educated guess as to the motives, given it aligns with BOTH you and Mike.

     

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  18.  
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    Mike Masnick (profile), Aug 16th, 2011 @ 1:48am

    Re:

    Reach much there Mike?


    Not at all, since Google has confirmed that it was about the patents.

    Google appears to have purchased Motorola mostly to have a "hardware front" for it's Android operating system, one company / brand / series that is an existing name, with existing distribution and existing connections. They can walk in, toss out any other OS that might be in use (including any in house ideas) and more to a full Android effort.

    Except that makes no sense. Android already had a strong hardware base around the world from multiple companies in a manner that didn't cost Google a dime.

    Essentially, it moves Google into the same situation as Apple, maker of both the OS and the phones they run on. They tried to do this selling "Google phones", and that pretty much didn't work out. Now they take over a company that has a solid reputation, solid hardware base, and solid industry connections, assuring that Android (and whatever might come after it) has a home for life, no matter where the rest of the companies involved go.

    Google made it clear that it did the Google phone only to push device makers forward after the first few Android phones were crap.

    Patents are wonderful things, but Google really wants to be vertical market, and this is a huge step in that direction.


    Funny that almost every reason Google gave for the buyout had to do with patents, then, huh?

     

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  19.  
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    John Doe, Aug 16th, 2011 @ 4:29am

    Re:

    Yes. I have a Motorola Droid X and love it, but please give me a pure Android interface.

     

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  20.  
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    DannyB (profile), Aug 16th, 2011 @ 5:54am

    The other handset makers ARE pleased

    The other handset makers are pleased about this.

    http://www.slashgear.com/htc-sony-ericsson-and-lg-praise-googles-17k-motorola-patent-grab-1 5171695/

    http://phandroid.com/2011/08/15/motorola-competitors-comment-on-googles-acquisition-ever yone-approves/

    "We welcome today’s news, which demonstrates Google’s deep commitment to defending Android, its partners, and the ecosystem."

    - J.K. Shin
    President, Samsung, Mobile Communications Division

    "I welcome Google‘s commitment to defending Android and its partners."

    - Bert Nordberg
    President & CEO, 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, HTC Corp.

    "We welcome Google‘s commitment to defending Android and its partners."

    - Jong-Seok Park, Ph.D
    President & CEO, LG Electronics Mobile Communications Company

    At least, that's what they're saying in public.

     

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  21.  
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    DannyB (profile), Aug 16th, 2011 @ 6:01am

    Re: Re: Re: all in

    Or use Motorola's patents on basic GSM tech and digital packet radio tech to get an injunction to enjoin Apple from ever infringing on its patents ever again. Sorry, we're not interested in licensing.

    HTC bought S3. S3 has lots of graphics patents. Macintosh infringes S3's patents. HTC might want to sue to get Apple to stop selling Macintosh computers that infringe S3 patents. Sorry, we're not interested in licensing.

    Not fair you say? That's how Apple wants to play the game. Apple wants to completely and utterly destroy Android players' business and they have shown their hand. After all, Apple has gotten Samsung's tablet banned in Australia and the EU. Apple isn't interested in licensing.

    Of course, I think Apple's design patents are weak compared to Motorola's and S3's patents. It's like patenting the design of a television that has a screen that is rectangular. Given the very concept of what a tablet computer is, and they've been envisioned, and even some primitive implementations have exited for years, the form, size and shape are pretty obvious functional requirements. Rounding the corners is not "brilliant", not "novel", nor an "insight".

     

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  22.  
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    DannyB (profile), Aug 16th, 2011 @ 6:04am

    Re: I Suppose The Patent Rationale Makes Some Sense

    Yeah, it's such a mystery. (*cough* patents *cough*)

     

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  23.  
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    DannyB (profile), Aug 16th, 2011 @ 6:07am

    Re: Imagine

    (troll mode on)
    But think of the starving lawyers!

    Patents encourage innovation. Spending all that time and money dealing with patents and lawyers enables innovation. If business didn't have to spend that time and money on lawyers, how would they innovate? You have to invest in order to succeed.

    If all that money weren't spent on lawyers, it would just evaporate from the economy! Think of the waste!
    (troll mode off)

     

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  24.  
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    Ninja (profile), Aug 16th, 2011 @ 6:09am

    Re: Hardware Patents

    I wonder if I'm the only one that see this as an epic event of Chuck Norris proportions (considering that the 12,5 bn come in cash too). And I agree with your (surprising?) coherence ;)

    We saw Apple, M$ and the likes being complete arseholes and choosing litigation over market competition. Well, that's Google showing them a HUGE middle finger. I mean, as pointed in the article below Motorola does own the patent for cell phones.

    Apple, MS, RIM and whoever decided to litigate against Android must be in panic. I always said Google tried to maintain the status quo and I'd love, LOVE to see it using its claws. Well, it seems Apple/M$/etc pushed too far and broke the balance =)

    http://techcrunch.com/2011/08/15/by-buying-motorola-google-can-now-do-whatever-the-heck-they-w ant-with-android/

     

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  25.  
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    Ninja (profile), Aug 16th, 2011 @ 6:38am

    Re: Re: all in

    That. If Google effectively joins forces with Samsung, HTC and others, Apple and Microsoft are completely screwed. They obviously have some higher grounds on the war against Android itself but they also have lower grounds that may undermine their strategy. And there's the hardware part that Motorola probably has some advantage.

    Google wouldn't have bought it if the patents weren't worth for sure.

     

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  26.  
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    Ninja (profile), Aug 16th, 2011 @ 7:02am

    Re: Where DOES Google get its money?

    Because no other big company tries to keep their expenditures (including taxes) under control. Apple has not moved to 'made in china', Microsoft doesn't use huge call-centers in India redirected via VoIP etc etc etc etc etc

    No, no, Google is evil. The rest is good ;)

     

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  27.  
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    Ninja (profile), Aug 16th, 2011 @ 7:07am

    Re: I Suppose The Patent Rationale Makes Some Sense

    Patents and exactly pushing Microsoft away (Motorola won't be using Windows 7 Mobile huh?) come to mind. I don't see any mystery but I'll agree that how it turns out in the long term is a mystery indeed.

     

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  28.  
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    Ninja (profile), Aug 16th, 2011 @ 7:12am

    Re: Re:

    I think think AC was in a comma and he woke up to read your post. Be reasonable with him Mike. /derp

     

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  29.  
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    Ninja (profile), Aug 16th, 2011 @ 7:16am

    Re: Re: Hardware Patents

    I should add that by maintaining the status quo I meant not going aggressive and litigating. Google seems to like some competition and seems to be willing to embrace everything and compete everywhere. Not sure if it is a nice thing but I felt it was necessary to point it out heh

     

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  30.  
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    Anonymous Coward, Aug 16th, 2011 @ 8:38am

    Re: Re:

    [citation needed]

    Patents are SOME of the reason. They aren't all of the reason. If it was only patents, they would have also announced they were shutting down phone production. They didn't. Figure that out!

     

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  31.  
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    David Liu (profile), Aug 16th, 2011 @ 12:11pm

    Re: Re: Hardware Patents

    A huge middle finger at the cost of $12.5 billion as compared to $4.5 billion (split across six companies).

    And since Google (to my knowledge) hasn't had a history of litigation, only defending themselves, I kinda think AppleSoft are just laughing it up right now.

     

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  32.  
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    David Liu (profile), Aug 16th, 2011 @ 12:16pm

    Re:

    Sources say that the Motorola buy was spurred on by the loss at the Nortel auctions, not the other way around.

    http://gigaom.com/2011/08/15/guess-who-else-wanted-to-buy-motorola/

     

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  33.  
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    The Incoherent One (profile), Aug 16th, 2011 @ 2:09pm

    Re: Re: Re: Hardware Patents

    I really don't think they are laughing. I think the lawyers over at Apple are busy pouring over the patent library to see where they may be vulnerable.

     

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  34.  
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    Derek Kerton (profile), Aug 16th, 2011 @ 4:59pm

    Re:

    Google placed bids over $4B. I don't think they were fake bidding. Their bids might have won the Nortel auction if the others had not banded together to bid more.

     

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  35.  
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    Derek Kerton (profile), Aug 16th, 2011 @ 5:04pm

    Re: I Suppose The Patent Rationale Makes Some Sense

    Google does not "want to buy a western phone company as a going concern."

    In the "Buy one, get one free" deal that is the Google purchase of Motorola, the "going concern" was the "get one free" part.

    The "Buy one" part was articulated clearly in between the coughs of DannyB, above.

     

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  36.  
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    Derek Kerton (profile), Aug 16th, 2011 @ 5:12pm

    Re: Re: Re:

    Wow, you are not clever.

    Lemme help.

    The company cost some $12B. It has cash of some $3B. It has patents worth some $12B (based on simple number count and the Nortel IP valuation), and it has operational value based on sales of phones of some $7B (based on certain Wall St. rules of thumb and current/projected sales. If you don't believe my numbers, just take them as hypothetical.

    Total value = $22B

    Yep, it was just a good deal, and the patents are so significant to Google at this juncture.

    So, to answer your silly if/then, "they would announce they were shutting down phone production." Well, they still could. But that would be pretty stupid, since it is a $7B valuation. You don't throw away $7B. But, they could divest that part of Motorola in the future, and return to their core of offering software and advertising.

     

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  37.  
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    Derek Kerton (profile), Aug 16th, 2011 @ 5:18pm

    Re:

    You say that Google wants Motorola so that it can do vertical integration, like Apple does.

    No way.

    Google already has a wide range of great Android handsets from a number of OEMs. They can produce greater quantity than a single OEM, they can innovate faster in competition with one another.

    Google also can produce a Google-designed, vertically integrated handset WITHOUT purchasing Motorola. Are you unaware that Moto, HTC, Samsung and others BID on the opportunity to build the Nexus phones for google. The OEMs are lining up to build a Google designed, vertically integrated phone. And Google has already released two of these flagships to market. They will release another this fall. Read much?

    Oh, and one last lethal indictment on your reasoning. Google does not need to buy Motorola to be "in the same situation as Apple, maker of both the OS and the phones they run on." Maybe you are unaware, but Apple does not make their own phones. They outsource that to a contract manufacturer called Foxconn.

    You, sir, do NOT read much. Or if you do, you don't understand.

     

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  38.  
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    Tech Outsighter, Aug 17th, 2011 @ 6:58am

    ummm licensing already in place???

    weren't apple and motorola in bed for cell phones for a while? I didn't see motorola suing apple over iphone 1, 2, 3, 3gs, or 4...what makes you think google has any advantage now?

     

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