Wednesday, August 17, 2011

Mobile: Yes, Motorola Squeezed Google For $12.5 Billion, So Who Has A Better Set of Patents? What’s Next For Google?

Here's an interesting post on the continuing saga surrounding Monday's announcement of Google buying Motorola Mobility.  Forbes (via MacDailyNews) pointed out what we all know:  how Motorola put the squeeze on Google and forced Google to cough up $12.5 billion.

Honestly, $12.5 billion isn't a lot of money to the likes of Apple, Google, or Microsoft.  And these guys are the ones fighting the vast majority of the patent war.  

So, how did Motorola walk away with an over 60% markup to its market value?
Essentially, MM used its negotiation with Microsoft regarding patent buyouts, possibility of using Windows Phone 7, and the threat to use fellow Android phone makers like Samsung and HTC to collect royalty fees to get Google to pay for the $125 billion.  And Google obliged because it was trying to make sure Android, a dominant mobile platform, stays that way.  

Who knows what a patent civil war among Android makers could do to the platform.

Meanwhile, an investor is upset and is suing Motorola Mobility over the deal.  Why?  He (who he is doesn't matter) suggesting that Google underpaid for MM.  Using simple math, he suggested that Google paid a lot less for Motorola's patents than the consortium lead by Apple paid for Nortel's patents.  According to his math, Google paid just a bit over $510K per MM patent while the Nortel buyers paid $750K (my math has it at $700K) per patent.

On the surface, that may be true.  However, the investor is wrongly assuming that all the patents Motorola owns and those Nortel ones are on equal footing.  Obviously, his attorneys, who stands to make money whether he wins or not, are not going to tell him that.  

Furthermore, I would like to point out that if Motorola's patents are such that it drives the fear into its competitors, why are they being used by Microsoft?  Or Apple for that matter.  Apple holds quite a bit of patents but only a few of them as actually mobile ones.

The deal will go through as announced and the attention needs to be on what Google will do next.

I think Google is planning what I've suggested previously.  First, Google will use Motorola's patents to force other Android makers into a cross licensing agreement.  Then in a second phase, use this larger pool of patents to make a move on the whole mobile market.  

Which is why I believe the patent war will go on as long as this same cast are still involved in the the larger mobile war.  And no amount of patent reform will change all that.

Note:  If you read through the whole Forbes post, the author believes a rival bid from Microsoft could be in the works. Wow…

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