Google buys Motorola!

[FG Lurker]

Well, it looks like Google has found the answer to their patent woes, they just dropped $12.5 billion to buy Motorola Mobility.

Motorola Mobility has about 17,000 patents, mostly related to mobile communications. They have many key antenna technology patents and a lot of 3G and 4G patents as well.

This is definitely a big "F YOU!" to Apple and Microsoft and a major re-balancing of the patent status quo. Android is looking a lot safer from litigation today than it was yesterday.

[Coligny]

Well, it looks like Google has found the answer to their patent woes, they just dropped $12.5 billion to buy Motorola Mobility.

Motorola Mobility has about 17,000 patents, mostly related to mobile communications. They have many key antenna technology patents and a lot of 3G and 4G patents as well.

This is definitely a big "F YOU!" to Apple and Microsoft and a major re-balancing of the patent status quo. Android is looking a lot safer from litigation today than it was yesterday.

sumthing tells me this kind of sale need to be approved first...

[FG Lurker]

sumthing tells me this kind of sale need to be approved first...

I don't think Google will have any trouble getting approval for this acquisition. Apple, Microsoft et al have already been getting some attention from the FTC in the US for ganging up on Google with regards to Android. I suspect Apple and MS both shat a few bricks when they read the news this morning though. I don't think MS will be getting any more licensees for their Android patent-troll BS they have been pulling recently.

[2triky]

Wow, big move by Google.

The recent explosion of intellectual property lawsuits is an obvious perversion of the patent system. I'm sure it's quite obvious to most people that as a matter of public policy, no one envisioned that patent lawsuits would be used as a first line strategy to compete in the market by stifling competitors.

To put it mildly, it's gotten out of hand. Given the transactions costs associated with litigation, in terms of time and money, at some level it must prove to be a drain on innovation, even for the some of the wealthy firms implicated in these suits.

[FG Lurker]

Personally I don't think software should be patentable, and I had been hoping that Google would fight to get the patent system changed rather than joining it with a massive purchase like this. Perhaps they will do both -- cover their asses with this purchase while pushing for serious patent and copyright reform.

[LesTalk]

sumthing tells me this kind of sale need to be approved first...

Google is already facing FTC scrutiny over AdMob and Admeld. It likely will not face significant scrutiny over this sale since they will not gain a majority share of the market as an OEM. Google certainly doesn't see much chance of this falling apart - it's breakup fee would be $2.5 billion.

Paradoxically, the deal may drive some of its OEM partners, particularly Samsung and HTC, to focus more on Windows Phone 7 in order to diversify their portfolios away from Android, now that Google is to become a competitor. That would actually benefit Nokia by increasing the market for Windows Phone and also bringing more app developers into that platform.

It would be nice to see Microsoft focus more on mobile software development rather than mobile royalties, though arguably they make more per unit shipped for an HTC Android device than they would for a Windows Phone 7 device.

[wagyl]

Google ... pushing for serious patent and copyright reform.

hahahahahahahahahahahahahahahahahahaha

[breathe ...]

hahahahahahahahahahahahahaha

(free for all does not equal reform)

With that out of the way, and uttering the thread killing "where is the Japan connection?" question, I point to thisanalysis of the deal.

[Coligny]

Seriously, same should go with patent on just ideas or concept without a working prototype... It's ridiculous...

[American Oyaji]

Motorola has been trying to dump their mobility unit for 3 years now.

To misquote Inigo Monotya, "I don't think that company is gonna do for you what you think it's going to."

Google got chumped on this one. Just watch.

[FG Lurker]

Motorola has been trying to dump their mobility unit for 3 years now.

In 2008 Motorola decided to split into two companies, Motorola Mobility and Motorola Solutions. The split was delayed and didn't actually take place until January of this year. So, Google isn't buying a unit of Motorola Inc they're buying an entire company (and that company's patent portfolio.)

To misquote Inigo Monotya, "I don't think that company is gonna do for you what you think it's going to."

Google got chumped on this one. Just watch.

I'd be pretty surprised to see Google screw up an acquisition this large and this important. Time will tell though.

[FG Lurker]

Seriously, same should go with patent on just ideas or concept without a working prototype... It's ridiculous...

I'd go even further. If a company is not actively using a patent they should lose it after a much shorter period than 20 years. Patents were supposed to allow businesses (or inventors) to profit from their innovations. If they aren't actively doing so the patent should become invalid.

[Russell]

I'd go even further. If a company is not actively using a patent they should lose it after a much shorter period than 20 years. Patents were supposed to allow businesses (or inventors) to profit from their innovations. If they aren't actively doing so the patent should become invalid.

Well, companies have to pay maintenance fees to keep their patents, and if they stop paying, they will lose their patent rights in less than 20 years. So, in practice it already kind of works like you proposed. Only the valuable patents (i.e., those by which they can make money) will be kept in this way.

[FG Lurker]

Well, companies have to pay maintenance fees to keep their patents, and if they stop paying, they will lose their patent rights in less than 20 years. So, in practice it already kind of works like you proposed. Only the valuable patents (i.e., those by which they can make money) will be kept in this way.

I was more aiming for patent trolls who do nothing with the patents they own except sue other companies for license fees. This was not the idea behind the patent system and I don't think it should be allowed to continue. Many of the patents involved are frivolous at best but companies pay up because patent litigation is so expensive.

[Russell]

I was more aiming for patent trolls who do nothing with the patents they own except sue other companies for license fees. This was not the idea behind the patent system and I don't think it should be allowed to continue. Many of the patents involved are frivolous at best but companies pay up because patent litigation is so expensive.

Basically you are right, but in practice it works different for almost all companies. If a company has a patent (call it A), other companies try to get patents related to it, aiming to build a wall of patents around patent A. Now if the first-said company wants to develop a product based on patent A, it may violate the patents set up around it. As a result it has to negotiate with the other companies. The outcome may be payment of license fees or exchange of rights of its other patents with the other companies.

To prevent a wall being built around your patent, it is best to formulate it as wide as possible, even if the technology has not been completely developed. I think this is probably the way a small inventor or company should go.

[Doctor Stop]

Android is looking a lot safer from litigation today than it was yesterday.

If it's patents that Google was after, it would have been a lot smarter for them to have just licensed the patents from Motorola Mobility. Those patents are probably of little value in protecting Android anyway which is probably why Google didn't go that route. If they had any real value, you would expect Motorola Mobility to have been making profits licensing them the last few years, which would have made up for the fact that the company can't make money selling handsets.

I wouldn't be surprised that the real reason for Google's buy was that MM was planning on getting out of the unprofitable Android market.

[FG Lurker]

If it's patents that Google was after, it would have been a lot smarter for them to have just licensed the patents from Motorola Mobility. Those patents are probably of little value in protecting Android anyway which is probably why Google didn't go that route. If they had any real value, you would expect Motorola Mobility to have been making profits licensing them the last few years, which would have made up for the fact that the company can't make money selling handsets.

Licensing patents doesn't help you use them defensively. Google has found they need defensive patents to stop the attacks and patent trolling of MS and Apple.

The patent system is broken and needs to be fixed. Until that happens though defensive patents are important, especially for a disruptive company like Google.

[FG Lurker]

Basically you are right, but in practice it works different for almost all companies. If a company has a patent (call it A), other companies try to get patents related to it, aiming to build a wall of patents around patent A. Now if the first-said company wants to develop a product based on patent A, it may violate the patents set up around it. As a result it has to negotiate with the other companies. The outcome may be payment of license fees or exchange of rights of its other patents with the other companies.

To prevent a wall being built around your patent, it is best to formulate it as wide as possible, even if the technology has not been completely developed. I think this is probably the way a small inventor or company should go.

I understand that but none of it applies to patent trolls who don't use the patents themselves. Their entire business model is to buy (often dubious) patents and then sue other companies for license fees. It's little more than a 21st century protection racket and IMO should be treated much the same way.

[Doctor Stop]

Google has found they need defensive patents to stop the attacks and patent trolling of MS and Apple.

I wouldn't describe MS or Apple as being patent trolls. Companies like Lodsys, yes.

[FG Lurker]

I wouldn't describe MS or Apple as being patent trolls. Companies like Lodsys, yes.

Patent troll is perhaps too strong a term but both MS and Apple are using their patent collections to intimidate Android handset manufacturers. For obvious reasons Google wants to put a stop to that.

Major tech companies are engaged in a type of Mutually Assured Destruction (MAD) with patents, and Google didn't have enough of a portfolio to bring to the table. Motorola fixes that for their Android division but they still have issues with Oracle attacking using Sun's Java patents. I expect Google is looking to make additional patent acquisitions to counter Oracle and other problems they are facing.

[BigInJapan]

Andrew Orlowski of The Register seems to think that the Google Motorola deal is a "dud".

Has Google wasted $12bn on a dud patent poker-chip?
Larry Page's Moto bluff fails to convince

Analysts I've spoken to are already wondering how much due diligence Google performed before the announcement, or whether the Motorola acquisition will turn out to rival Terra's legendary, rushed purchase of EMI. Here's why.

Android is a copycat platform. The APIs copy Java, and the UI copies Apple's iPhone. Oracle believes Google has violated Java IP, which it acquired with Sun Microsystems. Google says the language, and a third of Android's API's are "derivative" of Java. On the other warpath, Apple has launched three dozen lawsuits relating to usability and UI. Apple is hurling these lawsuits at Android licensees, rather than at Google itself. Google has refused to indemnify its partners, causing much nervousness.

These radio and design patents of legacy manufacturers such as Motorola or Nokia really aren't worth quite as much as their owners think they are.

Google has paid $12.5bn for a negotiating chip that appears to be almost impossible to redeem.

[Full article on The Register]

[Doctor Stop]

Android is in serious trouble, FG. Even without the patent and trade dress lawsuits.

[FG Lurker]

Android is in serious trouble, FG. Even without the patent and trade dress lawsuits.

How so?

[BigInJapan]

Android is in serious trouble, FG. Even without the patent and trade dress lawsuits.

I'm also curious to know how Android could be in trouble.
Even in Japan where smartphones had a sluggish start, as of the latest summer batch of new smartphones, Android is the OS of choice for the majority of them.

US smartphone share: (Nielsen, March 2011)


US smartphone share - recent acquirers: (Nielsen, March 2011)


Some more recent studies showing the global Android share:

Gartner: Android market share to near 50 percent
Android hits 46 percent global smartphone share, says study
Google's Android gains 40% share of global smarthphone OS market
Android is No. 1 in 35 countries, approaches 50% global market share

[Doctor Stop]

You guys are talking about market share, I'm talking profits. All those Android phones aren't really making the manufacturers any money. Apple makes more money selling smartphones than all the other smartphone makers combined.

Android manufacturers are in competition with the all the other Android manufacturers, not with Apple. Apple's not going to lower the price of the one new phone they come out with a year because there's a few new Android phones coming out every month.

It's the Android makers that are under pressure to undercut the other Android makers on price. That's a recipe for even lower profits.

[2triky]

You guys are talking about market share, I'm talking profits. All those Android phones aren't really making the manufacturers any money. Apple makes more money selling smartphones than all the other smartphone makers combined.

Android manufacturers are in competition with the all the other Android manufacturers, not with Apple. Apple's not going to lower the price of the one new phone they come out with a year because there's a few new Android phones coming out every month.

It's the Android makers that are under pressure to undercut the other Android makers on price. That's a recipe for even lower profits.

A firm like HTC has doubled its profits in the span of a year to the tune of $600 million dollars on $4 billion in revenue shattering the company's previous record. I hardly think they are concerned at their lack of money making potential at this point.

[matsuki]

You guys are talking about market share, I'm talking profits. All those Android phones aren't really making the manufacturers any money. Apple makes more money selling smartphones than all the other smartphone makers combined.

Android manufacturers are in competition with the all the other Android manufacturers, not with Apple. Apple's not going to lower the price of the one new phone they come out with a year because there's a few new Android phones coming out every month.

It's the Android makers that are under pressure to undercut the other Android makers on price. That's a recipe for even lower profits.

What you say is spot on but consider that manufacturers other than Apple have no better alternative than Android. The Windows mobile OS needs quite a bit more refinement and Android is on Apple's heels OS-wise whereas the Android OS handsets blow the iPhones out of the water.

[FG Lurker]

You guys are talking about market share, I'm talking profits. All those Android phones aren't really making the manufacturers any money. Apple makes more money selling smartphones than all the other smartphone makers combined.

History is repeating itself, it's Windows vs Mac all over again and the results are already pretty clear: Apple will end up as a profitable boutique company while Android (think MS Windows) takes over the majority of the market. These are commodity devices and will become even more-so as time goes on.

[2triky]

The US Patent System Is Killing Innovation

[Kuang_Grade]

You guys are talking about market share, I'm talking profits. All those Android phones aren't really making the manufacturers any money. Apple makes more money selling smartphones than all the other smartphone makers combined.

Android manufacturers are in competition with the all the other Android manufacturers, not with Apple. Apple's not going to lower the price of the one new phone they come out with a year because there's a few new Android phones coming out every month.

It's the Android makers that are under pressure to undercut the other Android makers on price. That's a recipe for even lower profits.

Replace the word "android" with any other mobile OS other than Apple and what would change in your argument? This is no different than the pre smartphone era. Apple does gangbusters becuase they've convinced alot of people that they are the thing to buy (and because they locked up very lucrative deals with carriers) and things are going to get tougher for Apple now that decent enough android phones are reaching the free with contract level pricing and consumers will have to debate if the the latest iphone is really worth $200 out of pocket more than say, a HTC EVO. If anything, android has increased their profitability because these guys now don't have to spend nearly as much on internal software development and bribing developers to write programs for their narrow OS platforms.

[Doctor Stop]

A firm like HTC has doubled its profits in the span of a year to the tune of $600 million dollars on $4 billion in revenue shattering the company's previous record.

They're going to need it because they're going to see a lot of those profits eventually going in other companies' pockets.