Google Dumps Motorola, Keeps The Patents

from the but-of-course dept

Back when Google first bought Motorola Mobility it was obvious that it was entirely about the patents. While there are still plenty of questions as to whether or not those patents are any good, Google needed to get its hands on a big bunch of patents for defensive reasons pretty quickly, and after losing out on Nortel's patents, picking up Motorola was apparently the quickest way. In fact, quite a few people expected Google to just dump Motorola's handset business quickly, in part to avoid competing with a variety of other Android partners, like Samsung and HTC. We even predicted that Google would likely sell off the handset business and keep the patents. However, Google insisted for a while that it was really going to make a go of being in the handset business itself.

Well, that little pipedream is now over, with Google selling off the handset business to Lenovo for $2.91 billion. Some are pointing out the rather massive difference between this and the initial purchase price of $12.4 billion, but that leaves out a lot: mainly, Google is keeping the patents and just licensing them back to the company. In 2012, Google claimed that it valued the patents at $5.5 billion. Also, it got $2.9 billion in cash from Motorola, and I'd imagine that's not going to Lenovo too... Instead, at the time of the acquisition, Google said it valued Motorola's customer relationships at $730 million and "other net assets" at $670 million -- and then had another $2.6 billion in goodwill (more or less the premium Google had to pay to get Motorola to sell). Given that, the sale isn't a huge "loss", though it does make Google look kind of silly for pretending it was really in the hardware business for a bit.

In the end, just as we predicted at the beginning, this is a story of the silly things a tech company is forced to do these days because of our stupid patent laws. The end result here pretty much confirms it all. Google shelled out $12.4 billion for a bunch of patents and hung onto a hardware business it never really wanted, and which it has now discarded. Without the pointless patent battles, it's unlikely Google ever would have bothered. So: would we be better off in a world where Google had actually been able to invest that money into making better offerings? Or where Motorola's investors got it?

Filed Under: handsets, patents
Companies: google, lenovo, motorola mobility

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  1. identicon
    Donglebert the Needlessly Obtuse, 30 Jan 2014 @ 4:30am

    Re: Re: Set Top Boxes


    $12.4 billion paid.
    - Received $2.9 billion cash on top, so effectively paid $9.5 billion.
    - Sold set top box div for $2.35 billion - balance of $7.15 billion.
    - Sells to Lenovo for $2.91 billion - balance of $4.24 billion.

    So if the patents are worth $5.5 billion, they're quids in, especially when you consider Moto is still making a loss so it's better to get out earlier than later.

    Even if the patents weren't really worth that, they probably saved a strong mobile brand for Android, added competition to the market, gained better knowledge of the market, and, it appears, gained some leverage over Samsung.

    Also, the Moto X looks to be a lovely device. More importantly, the Moto G was a massively important device that set a high bar at the budget end of the market that Android was losing to MS Nokia.

    Would they have made the Moto G without Google? I think not. Certainly in Europe, the Moto G and Moto X are the only Android devices by Motorola marketed.

    At the start of 2012, Android looked to be all Samsung. At the start of 2014, Android is Samsung, HTC, LG,...and Motorola.

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