Slashdot Mirror
Analysis of Google's Motorola Acquisition
bonch writes "Pundits have been analyzing Google's Motorola acquisition since its announcement. Dan Lyons, formerly known as Fake Steve Jobs, says Google never cared for the Nortel patents, and that they drove the bidding price up intentionally while negotiating to buy Motorola. This idea is questioned by MG Siegler, who believes buying Motorola for $12.5 billion — almost two years' worth of Google's annual profits — is an act of desperation. John Gruber notes that Motorola was threatening to wage a patent war against other Android partners during the time they would have been negotiating with Google, and that Motorola likely forced them into an expensive buyout rather than a patent license agreement. Google may have also been motivated by the fact that Microsoft was reportedly pursuing a Motorola buyout."
S&P researchers apparently weren't a fan of the deal.
Both Apple and Microsoft are already in patent lawsuits with Motorola. Google has tried to get some smartphone patent portfolio for themselves too, but they just burned $12.5 billion on patents that
1) don't help them at all against Apple and Microsoft
2) alienates other Android manufacturers
But there isn't much Google can do. People act weirdly and make mistakes when they're surrounded and desperate. Google made their mistake here.
Someone is confused by math and/or the word "almost".
MMI has billions in cash and equivalents on hand, and no debt. Google is effectively paying an amount roughly equal to their 2010 profits.
...and not focusing on the huge footprint Motorola has in the cable set-top box market.
Will consumers be watching videos on their computers, or surfing the Web on their TVs more in years to come? By buying the Motorola hardware, Google doesn't have to guess, their bets are hedged: They are ensured of continued revenue selling your surfing/viewing preferences to advertisers and the NSA no matter how the "connected TV" market shakes down.
A hardcore supporter of SCOX when they were attacking Novell over linux. So... why listen to him? Not like there's a dearth of pundits.
Belief is the currency of delusion.
Let's just sum up just how hard Google outplayed Apple and Google with Motorola Mobility acquisition:
* Feigned interest in the Nortel patent with joke bids
* Apple and Microsoft fell for the bait and overpayed for Nortel's patents
* Meanwhile Google is off negotiating with Motorola for the purchase of their mobile/settop box/IPTV division
* Apple and Microsoft and their proxies are plastering the Net with justification for using patents as a weapon against the Android Juggernaut
* Google drops the Motorola Mobility purchase bomb
* Google now owns the largest mobile patent war chest with some 17,000 patents and and additional 7,500 pending
* Apple and Microsoft have now made the case for Google to go after their each of their products without mercy with their newly acquired massive patent war chest
An Epic Win for Google.
Motorola Mobile has some 3 billion in cash, so the actual purchase price is around 9.5 billion for Google. The price per patent is an absolute steal compared to the money Apple and Microsoft were tricked into spending for the less valuable Nortel patents.
And for a cherry on top of this epic win for Google, they get Motorola's set top box and IPTV products and capabilities as a bonus.
You can tell just how major this win for Google is by just how desperate the spin from the Apple and Microsoft proxies in the press are pumping out.
While patents are part of the deal, I can see a greater emphasis in Google branching out into hardware and making their own phones in a larger scale. Lets face it, hardware manufacturers and carriers ruin the Android experience in a lot of cases, by expanding into hardware, Google can do what Apple does and create hardware and software that "just works".
Taxation is legalized theft, no more, no less.
Motorola has enough patents that the lawsuits are going both ways and the outcomes are far from certain. Compare that to other companies like Samsung and HTC that are currently getting trounced in court or have already rolled over.
Furthermore Motorola was threatening to open up the exact same kind of lawsuits against other Android manufacturers, so at least Google has nipped that one in the bud. Making a big point of that should help a lot with the alienation you think the other Android manufacturers should be feeling for some reason.
This may not be the best defense possible (maybe they should have spent a few more billion in the Nortel bidding, i dunno) but it's certainly better than sitting on their asses.
This Space Intentionally Left Blank
or desperate. I think Google decided it's time to do battle. It's easy to sue the little guys. But when your the size of Google, it becomes MUCH riskier. They can drag Apple, Oracle and M$ on for years in court. This is not what those three want. A lot of FUD is being displayed, trying to show this as desperation. But I think Google got tired of them picking on the manufacturers of the Droid phones. If Google did nothing, the three would drive away all Droid phones. That in turn would cut into Googles revenue. So they must take action. They already work with the patent office for search in patents and prior art. They have a lot of experience in that now. And they may wield some influence there and in politics. Dont underestimate their cunning. If they assemble a good legal team, it should turn out to be quite a battle. Especially if HTC and others band together with Google. Just waiting for the bell, so I can start making the pop corn.
Google is purchasing Motorola Mobility.
Wow. A post from this bonch character that paints google in a negative light. Color me surprised. this guy hates the google and android look through his posting history.
The soylentnews experiment has been a dismal failure.
Both Apple and Microsoft are already in patent lawsuits with Motorola. Google has tried to get some smartphone patent portfolio for themselves too, but they just burned $12.5 billion on patents that
1) don't help them at all against Apple and Microsoft
2) alienates other Android manufacturers
But there isn't much Google can do. People act weirdly and make mistakes when they're surrounded and desperate. Google made their mistake here.
Here is one for left field ... suppose Google creates a community cross-license (CCL) pool for Android, similar to the CCL pool for WebM.
http://www.webm-ccl.org/
Most of the 31 Android manufacturers join the new Android CCL pool, and chip in their own patents as well, so that all members of the pool get a zero-cost license to use all of the patents in the pool. Non-members still have to pay license fees.
It becomes possible for members of the Android CCL pool to build an Android mobile device completely covered by patents for zero license cost. Meanwhile, makers of iOS or WP7 devices still have to pay license fees.
Makers of Android devices can produce mobile devices at much lower costs while still protected by a large patent pool for which they are licensed.
Patent war against Android evaporates. Android is far cheaper for consumers than WP7 or iOS, Android wins, as do consumers. Massive PR win for Google. WP7 and eventually iOS devices effectively disappear. All Android mobiles can render WebM video. Google reaps in heaps of cash, even while collecting zero royalties.
When I left the GSM Mobile division of Motorola 3 years ago, I would have bet money that the company would fall flat sooner rather than later. My aptly timed departure came only a few months before my entire team was sent home. After riding the Razr wave all the way back to the beach, Moto had no competitive mobile software platform in its R&D pipeline. Even at that time, there were talks of the company spurning its mobile division, which was bleeding cash at an unprecedented rate and dropping market share to Apple, Samsung, and others. At a few dark corners of the office, a privileged group were working on integrating Android on some upcoming VZW handsets. Fast forward a bit, and Motorola finally did split the mobile division off. They were gunning for this outcome for years, I think Google was an inevitable outcome.
They're on a roll. Don't distract them with facts.
The fact that Google is buying Motorola Mobility is interesting itself of course, but the reportage is interesting too. It's getting a ton of press, almost all of it gloom and doom. BusinessInsider goes on about some of the major properties in the deal, but misses some major ones like factories around the world, an ARM Architectural license, and other things.
I don't think this is a bad deal for anybody involved. Sure, MMI isn't an earnings star right now - but they just finished a painful reorg and are on track to do very well now that it's over. Even at their worst they weren't burning WP7 marketing kinds of money. Their share has been declining, but they still have more of the market than WP7 does. Google gets some more patents for their growing defensive arsenal, which means the rest of us get to keep getting ever-better shiny Android widgets. Google's Android partners get a tough defender - and now it looks likely they'll be able to assemble a patent pool terrifying in extent. Moto might even stop with that Blur and locked bootloader nonsense. Moto doesn't get carved up and eaten by another phone vendor. The US factories don't close. There's lots to be happy about.
As you note, it's barely a dent for google. Google will make almost as much income in the time it takes for the deal to close, or half as much at least. People were already complaining Google was hoarding cash. MMI will probably spin off some money too.
So why the panic? I suppose it's disruptive. On Friday a lot of folks thought they had a plan to kill Android. Now they're going to have to go back to the drawing board. People don't like too much change.
Help stamp out iliturcy.
don't tell them about the snazzy gingerbread tablet from vizio that walmart is selling, it's not as powerful as some, but it very well thought out.
1) charges off USB instead of a Barrel charger
2) 3 speaker positions for sterio in portrait and landscape view
3) programmable universal remote app and IR unit for home theater integration
4) mini HDMI port and flawless rendering of 720p high profile
for $299
seriously i want this tablet
Snowden and Manning are heroes.
People seem to be ignoring this huge point. Motorola Mobility also includes their video hardware division. This is the group that designs, distributes, and supports headend hardware for cable video systems, and the set top cable boxes made to connect to those systems...not just set tops as some have commented. Think encrypted QAM video services from the sat down to the customer. Think VoD servers for storing and streaming digital video content to set tops. Motorola and Cisco (Cisco owns Scientific Atlanta, SA) produce the most widely used video headend systems in the states. Moto's DAC is still the most widely used in most cable system footprints here. Now think about how video service is evolving today and mash these new properties in with Google TV/Android. Don't forget about all the fiber Google has been buying up over the years. Yeah, shit is about to get real.
Google is effectively paying an amount roughly equal to their 2010 profits.
I'm sorry, but what are you talking about? Google agreed to pay $12.5 billion for Motorola Mobility. Google's 2010 net income was $8.5 billion. Unlike you I didn't pull that figure out of my ass. That's according to Google's own financial statement.
According to the same statement their 2009 net income was $6.5 billion, so they paid nearly two years profit for MMI. Coupled with the facts that the $12.5 billion price represent a 60% premium over MMI's share price, and that Google agreed to pay a penalty of $2.5 billion if the deal falls through for whatever reason, this certainly smacks of desperation on Google's part.
And the deal could very well fall through. It's still subject to regulatory approval, and with Google being investigated worldwide, this is certain to ratchet up the scrutiny. And then there's good ol' Microsoft. What if they decided to play spoiler and offer more for MMI? I certainly wouldn't put it past them.
I was going to finish by saying that I have to agree with Gruber on this one. While Google was in active negotiations with Motorola, Motorola CEO Sanjay Jha, and their largest shareholder, Carl Icahn, were making public statements about attacking other handset manufacturers with their patent portfolio, as well as the possibility of licensing Windows Phone 7. The timing of the statements can't have been a coincidence, and I'd be wiling to bet that they were designed to pressure Google at the bargaining table. The deal so generously favors Motorola that it sounds to me as if the terms were dictated by them. I think Motorola was in the driver's seat the entire way.
What's the point of saving your pennies if you can't buy cool stuff when it's on sale?
Help stamp out iliturcy.
You do not "fein interest" in something by bidding a few billion dollars. What if they had won? Very obviously they meant to get that, or at least it was a serious attempt.
Apple and Microsoft got a huge patent bundle for far less than Google, which they can now use to defend against Motorola patents Google has acquired, so in fact Apple and Microsoft (and other partners) have been shown to be eerily prescient in requiring said patents even IF this had been Google's plan all along.
And speaking of "overpaying" - Motorola has been losing money. It's not like Google has ONLY paid 12 billion dollars, they have bought continuing obligations that will cost more. And in case you hadn't noticed, 12 billion is a HUGE sum, far more than Microsoft and Apple shelled out individually - how can you say in one breath that those companies overpaid when Google bought the same commodity (patents) for a far steeper price?
I mean yes Google can use these patents against Apple/Microsoft but I question if the Motorola patent base has the same level of quality as what Microsoft/Apple had individually, never mind the Nortel stuff. Sure Google can go after them but all Google has really bought into is a very expensive draw, at best.
Which points to the real reason Google purchased Motorola - they needed at least a draw, and were willing to pay ANY price to get it. Which they did, because even though the people at Motorola could no longer design phones they sure could suss out a desperate buyer and take advantage of that...
In the end I question if it's a victory at all, for anyone. Because now Android HAS to start making Google some serious money in a way it did not before. Are you sure you wish to cheer the Android division becoming indebted to Google to the tune of 12 billion dollars and the subsequent changes that will occur as a result?
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Uhm ... what?
The ecosystem: well, that's exactly why they had to make this purchase. They had no choice.
1. First, they need a mobile story. Let's just take this as an axiom because this segment's going up, and desktop down.
2. Their story was Android, but it was threatened both by a) Apple and M$ and by b) Motorola's talking about charging for Android.
3. Buying Motorola solves both 2a and 2b.
As for starting over: 1) They'd lose time, which is money. 2) It's not just Google, all their partners would have to start over.
Simply bashing Apple/M$ on a blog doesn't do anything for them. And a whole new OS would still have been the same old target for Apple.
This purchase totally rewrites the rules. It also gets Google into the TV/cable business, just like that.
I'm not a lawyer, but I play one on the Internet. Blog
Then I would think you'd be rather more upset given the number of hardware makers that are going to switch away from Android after this.
People have counted Microsoft out but Microsoft is perfectly positioned to take over all of the gains Android has enjoyed, and is now telling handset makers "we are the only mobile OS not competing with you".
These guys know that Google is buying Motorola specifically because Microsoft and Apple attacked their businesses (and demanded licensing fees from many of them). They have more advantages by staying with Google.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)