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Analysis of Google's Motorola Acquisition 311

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.
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Analysis of Google's Motorola Acquisition

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  • He is right (Score:5, Interesting)

    by CaptainInnocent ( 2439004 ) on Tuesday August 16, 2011 @08:11PM (#37113822)
    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.
  • by Anonymous Coward on Tuesday August 16, 2011 @08:55PM (#37114192)

    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.

    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.

  • Re:Hardware (Score:3, Interesting)

    by NoNonAlphaCharsHere ( 2201864 ) on Tuesday August 16, 2011 @09:09PM (#37114302)

    But when it comes to ease of use, the iPhone has Android beat in every way.

    In much the same way that Apple's desktop OS has always had Windows beat in ease-of-use in every way. I've never seen two versions of Control Panel (to use your example) that were the same from version to version, either. Still doesn't get Apple any more than 10% of the market. Lots and lots of people like (pick any one): more flexibility, (including carriers!) more power, or lower price than they do (only) ease-of-use.

  • Re:Hardware (Score:5, Interesting)

    by dstar ( 34869 ) on Tuesday August 16, 2011 @09:19PM (#37114364)

    You know, your post made me wonder if that's perhaps part of the reason they made the purchase.

    Google support sucks, because Google doesn't _have_ a support organization -- and they don't know how to build one, either; it's not something that lends itself to the sort of algorithmical scaling that's their strength.

    MMI, on the other hand, presumably has a support organization that Google can leverage to build a support organization for their other products that need them. They might consider that valuable.

  • by DomNF15 ( 1529309 ) on Tuesday August 16, 2011 @09:33PM (#37114476)
    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.
  • by symbolset ( 646467 ) * on Tuesday August 16, 2011 @09:50PM (#37114556) Journal

    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.

  • Re:Hardware (Score:2, Interesting)

    by Darkness404 ( 1287218 ) on Tuesday August 16, 2011 @10:57PM (#37114910)
    Yes, but when it comes to what people view Android as, most people view it as a discount iPhone, which is very bad for Android's long term goals. Whenever Apple finally decides to release the iPhone for Sprint and T-Mobile, and eventually make the iPhone (or a previous generation) free on contract, Android's dominance will be over. It's like discount sodas, everyone views Dr. Thunder (or another Dr. X off-brand soda) as an off brand of Dr. Pepper, the moment Dr. Pepper drops its price to that lower of Dr. Thunder, what are people going to do? The vast majority of them will simply switch to "the real thing". Android, in the minds of many, is viewed as a cheap substitute to an iPhone, Windows Mobile (Phone 7) is viewed much the same way. As Apple expands, the cost per phone drops, allowing Apple, if it wanted to, to dramatically lower the price of its phones, particularly its older ones. Now, if Apple which has historically been a luxury brand wants to do this is a huge question, but the fact remains it -can- do it.

    Google needs to transition Android from being a cheap smartphone to being the best smartphone. The iPhone used to be an easy target, no multitasking, a restrictive app store and tied to a single carrier. However, today the iPhone has multitasking, the Google App store has gotten nearly as restrictive as the Apple one, while the Apple app store has relaxed a bit, and the iPhone is available on the two biggest carriers in the US. About the only thing that Android has going for it with non-geeks is more customization of the hardware and price. And Apple can easily drop its price. Hardware is the only sustainable advantage Android has at the moment, for example, there will never be an iPhone with a physical keyboard or game-pad controls, both of which are available on Android phones.
  • Re:He is right (Score:5, Interesting)

    by HiThere ( 15173 ) <> on Tuesday August 16, 2011 @11:03PM (#37114938)

    Well, it's not *just* patents. Motorola also had a special Java license. That might well be nice insurance against Oracle. (We don't really know, because the details of the license aren't public. Which, itself, is interesting.)

  • by jamrock ( 863246 ) on Wednesday August 17, 2011 @12:15AM (#37115358)
    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.

The party adjourned to a hot tub, yes. Fully clothed, I might add. -- IBM employee, testifying in California State Supreme Court