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Google's Motorola Adventure: Stinging Defeat, Or Semi-Victory?

Posted by timothy on from the all-the-way-to-the-bank dept.

Nerval's Lobster writes "Google had previously sold Motorola's Home division for $2.4 billion. Combine that with yesterday's $2.91 billion sale of Motorola's remaining assets, subtract the $12.5 billion acquisition price for the company back in 2011, and Google's little smartphone adventure cost it roughly $7.1 billion even before you start throwing in expenses related to actual production, marketing, and personnel. That's a hefty chunk of change, but some analysts think the deal was ultimately a good one because it allowed Google to pick up patents, engineering talent, and insight into the mobile-device marketplace. It's debatable, however, whether those patents ultimately helped Android in the still-raging smartphone wars, and Google was slow to promote Motorola smartphones out of fear of irritating other Android manufacturers. At least Google can console itself with the thought that so many of its other acquisitions—including YouTube and DoubleClick—resulted in massive profits; but you can't hit a home run every time you step up to bat."

8 of 139 comments (clear)

  1. The numbers by GeLeTo · · Score: 5, Insightful

    - $3.2B Moto's 2011 cash
    - $2.4B Moto's 2011 deferred tax assets
    - $2.35B Moto's Set-top-box business sold in 2012
    - $75M Moto's factories business sold in 2013
    - $2.91B Moto's Mobility business sold in 2014

    So the "patents, engineering talent, and insight into the mobile-device marketplace" cost $1.56B, not $7.1B

    1. Re:The numbers by AlphaWolf_HK · · Score: 5, Insightful

      That might be well worth it though. Take a few things into consideration here:

      - Of all people, they sold it to Lenovo, who has been rather disruptive in the PC making industry; not an easy thing to do even when they first started. Remember, they took the hardware division from IBM that was doing so-so at best, crappy at worst.
      - Lenovo wanted to get into the mobile business before buying Moto. If I were to guess, they came to Google on this one rather than Google coming to them (there wasn't any rumors of "motorola for sale" that I recall...maybe I'm wrong here.)
      - Lenovo going into the mobile business with Android is a VERY GOOD THING for Google and Android in general. Think about it: The more OEM's you have pushing Android, the better, especially if they can take some of the market share away from Samsung, which I think they are probably the most well positioned OEM to do so.

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    2. Re:The numbers by DickBreath · · Score: 5, Funny

      Yes, but Motorola's patents are on trivial things such as radio technology, modulation techniques, compression and encoding, antenna designs, digital signal processing techniques, using very little power, frequency hoping, GSM, and other things.

      Those patents are insignificant next to the innovations of bouncy scrolling and pinch to zoom!

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  2. Not the whole story by DeathToBill · · Score: 5, Insightful

    I've seen pretty convincing analysis today showing that, when you take the tax benefits of the deal and Motorola's cash position into account, Google is about $1bn to the good out of the deal, and it's retaining the patents. So it has bought a loss-making company for $12bn, broken it up into bits it can sell for around $5bn, got $3bn cash out of it, and about $6bn off its tax bill over the next six years, while gaining a large and important patent portfolio. Doesn't look look like a loss to me.

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    1. Re:Not the whole story by Bill,+Shooter+of+Bul · · Score: 5, Funny

      A billion here, a billion there, pretty soon, you're talking real money

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  3. Re:who cares? by bhagwad · · Score: 5, Insightful

    It doesn't matter if it doesn't matter. It's interesting and that's all that matters!

  4. Samsung by saleenS281 · · Score: 5, Interesting

    The Moto X was actually an outstanding phone. I dumped my gs3 for one. I think the real end-game here was getting Samsung back in line. Motorola phones were selling enough units to raise alarms at Samsung. It's not like Samsung was in any danger of losing their stranglehold on android phone sales in the short term, but long-term with Google's backing it was only a matter of time until Motorola started taking significant chunks. End result: Samsung has supposedly agreed to dump it's custom UIs and custom applications and fully embrace the Play store and the Google ecosystem. It seems unlikely the timing is just a coincidence.

    http://gigaom.com/2014/01/29/report-samsung-to-hold-the-touchwiz-on-future-android-devices/

  5. lost of course in the story are the Employees by BrianTarbox · · Score: 5, Insightful

    Not surprising of course but zero mention of the employees of Motorola Mobility and Motorola Home who got whipsawed back and forth these last few years. I remember celebrating back when Google bought "us" a few years back...only to quickly see that they had zero interest in anything but the patents. So happy to have gotten out early.