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Was Google's Motorola Mobility Acquisition a Mistake? 189

Nerval's Lobster writes "Even before the Google acquisition, Motorola Mobility was engaged in a major legal battle with Microsoft, insisting that the latter needed to pay around $4 billion per year if it wanted to keep using Motorola's patents related to the H.264 video and 802.11 WiFi standards. (The patents in question affected the Xbox and other major Microsoft products.) Had that lawsuit succeeded as Motorola Mobility originally intended, it would have made Google a boatload of cash—but on April 25, a federal judge in Seattle ruled that Microsoft's royalty payments should total around $1.8 million per year. 'Based on Motorola's original demand of more than $4 billion per year from Microsoft,' patent expert Florian Mueller wrote in an April 26 posting on his FOSS Patents blog, 'it would have taken only about three years' worth of royalties for Microsoft to pay the $12.5 billion purchase price Google paid (in fact, way overpaid) for Motorola Mobility.' This latest courtroom defeat also throws into question the true worth of Motorola Mobility's patents. After all, if the best Google can earn from those patents is a few pennies-per-unit from its rivals' products, that may undermine the whole idea of paying $12.5 billion primarily for Motorola Mobility's intellectual-property portfolio.
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Was Google's Motorola Mobility Acquisition a Mistake?

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  • by ip_freely_2000 ( 577249 ) on Friday April 26, 2013 @12:56PM (#43558255)
    No one blinked an eye when Google paid what it did for Motorola. Now, one judge has brought out the critics and the second guessing. Unless you have a time machine, or can talk to every judge with a 'what-if', you can only do your due diligence. It's time to move on and look to the next problem, not rehash the past.
    • I think a lot of people at the time of the purchase did raise that the price was too high. From other sources, who were also interested in the Motorola IP, the IP valuation I was hearing was ~$3B. Was the rest of Motorola worth $9B?
      • by icebike ( 68054 ) on Friday April 26, 2013 @02:18PM (#43559475)

        I think a lot of people at the time of the purchase did raise that the price was too high. From other sources, who were also interested in the Motorola IP, the IP valuation I was hearing was ~$3B. Was the rest of Motorola worth $9B?

        The article is one sided, only mentioning INCOME from this IP.
        It hardly addresses the defensive aspect of having this IP in their back pocket.

        Who knows how many billion dollar judgements Apple might have been able to extract for bounce back scrolling or whatever. Having one of you own patents cover what you do pretty much makes it impossible for Apple or some random patent troll (pardon the redundancy) to come after you, saving billions of dollars.

        Patents have value beyond JUST a revenue stream. In fact, only a Patent Troll would think of patents ONLY as a revenue stream. Which makes the whole article somewhat suspect.

        • by amiga3D ( 567632 )

          I think the wheels are starting to come off the patent gravy train. As judges wise up to the technology and the issues over time they are starting to realize how screwed up these patents really are.

        • by rsborg ( 111459 )

          ...pretty much makes it impossible for Apple or some random patent troll (pardon the redundancy) ...

          Yeah, you had to get that in there, but Apple is at least a practicing entity (ie, they sell stuff htat uses those patents. The worst are the NPE shell companies that sue you for infringement of their IP, but you can't sue them back becase they will simply close up shop and open another front... oh and they have no assets nor sell anything so you can't extract anything at all.

        • "The article is one sided, only mentioning INCOME from this IP.
          It hardly addresses the defensive aspect of having this IP in their back pocket."

          That's along the lines of what I thought then and now.

          Doesn't have to be the most bestest arrow in the quiver, just has to work at all. IIRC there are all kinds patents in the bundle; not only may some come in handy for future cases, and some only have to be useful to Google along the way, not just defensively if only by giving pause to future trolls and whatnot, b

      • I think a lot of people at the time of the purchase did raise that the price was too high. From other sources, who were also interested in the Motorola IP, the IP valuation I was hearing was ~$3B. Was the rest of Motorola worth $9B?

        That's been mitigated somewhat by selling a part of Motorola to the ARRIS Group for $2.2 billion in cash along with 10.6 million shares of its stock issued to Google. This is the "Motorola Home" group that makes cable set top boxes, etc.

    • by bobaferret ( 513897 ) on Friday April 26, 2013 @01:13PM (#43558575)

      Something in this part makes me twitch... "patent expert Florian Mueller ". I don't know much about Florian except that he gets the word 'shill' used next to his name on occasion, I can't even remember why. Therefor I do apologize if I am mistaken if my mistrust is misplaced.

      • by Anonymous Coward on Friday April 26, 2013 @01:32PM (#43558853)

        Mainly because he is paid by Oracle and Maybe even Miscrosoft and is often biased in favour of his paying masters.

        • That's right.... I knew there was something about him that's makes whatever he says questionable. thanks

      • by squiggleslash ( 241428 ) on Friday April 26, 2013 @04:47PM (#43561467) Homepage Journal

        You're right, and yes, he's a shill.

        What makes this article particularly unpleasant is the deliberate misrepresentation of Google's reasons for buying Motorola. Google didn't buy Motorola to ensure it made a profit from patent royalties. It bought Motorola so it has a warchest of patents it can use if Android is attacked by a company like Nokia or Apple.

        Microsoft hasn't attacked Android - it's gone to Android phone manufacturers and negotiated patent royalties, yes, but those royalties haven't been excessive and have been comparable to the royalties paid normally by mobile phone makers for key technologies. It hasn't tried to prevent Android phones from being made, nor tried to gouge Android phone makers. So Microsoft's settlement with Motorola was never going to be particularly excessive.

    • by Anonymous Coward

      and this... 'it would have taken only about three years'

      so what? Now it will take 6? They also bought a working company that oh I dont know makes product and not patents?

      They make a phone OS. The motorola guys make phones. Seems like a good idea. They may have a helpful tip or two on what to do...

      Over the years I have used may Motorola phones. You take care of them they work pretty good. My next one will prob be a samsung...

      Sometimes things do not ROI on day one. Sometimes it takes a few years. It

      • by icebike ( 68054 )

        They make a phone OS. The motorola guys make phones.

        The motorola guys also make a phone OS, and were doing so before android was a gleam in Andy Rubin's eye.

        Somewhere in the development of the original Razr which sold well over 130 Million units, there must be some IP and experience worth a few bucks even today.

      • It depends on the phone, I have friends with great experience with Motorola products but my wife and a friend of mine had the Motorola Triumph, and after a few months the phone starts having hardware problems. And of course tech support is the typical nightmare.

        But the problem with Google buying a mobile device manufacturer is that it puts Google into conflict with everyone else making Android products. Now Google has to work extra hard to convince all of the other Android device manufacturers that the
        • by Belial6 ( 794905 )
          This is why I say that Google should set a market share target for Motorola. They should take something like 10% of the Android market, and set their price to hit that target. While doing that, they should make beyond top of the line phones. The idea being that every other manufacturer should be compared to how close they are to the Motorola phones. If Motorola starts taking more than their target share, they can raise their price, increasing profit margins. They make more money and their partners don't
          • On first glance it's a reasonable idea, but I think it still hurts the partners. Selling the product that's perceived as the best in the segment, with a high price and high profits to match, is the market position every manufacturer wants to reach. So if Google grabs the juiciest 10% of the market, there will be 90% of the market available for everyone else but Google will own the segment everyone else wants for their own.

            I think the best thing Google can do is what they seem to have done so far - tre
            • by Belial6 ( 794905 )
              That it's if you think that the high end market is only 10%. It also rules out the possibility that Google might break even or lose money on those phones. Remember. The idea isn't to achieve the highest margins. It is to make the best phones irrelevant of margins, without taking over the whole market. To set a bar that other manufacturers will push towards. The highest margins are not always on the most expensive products.
              • Not always, but look at Apple - immensely profitable, and huge margins on expensive products.
                • by Belial6 ( 794905 )
                  True, but Apple will gobble up everything they can. They also forgo features as cost savings measures. My suggestion is that Google make the baddest of bad ass phones. Even if that mean taking a loss on the hardware. And then limiting there sales to 10 percent of the market. This is very different than what Apple is doing.
    • It's my understanding that Google bought Motorola Mobility for the patent lawsuits Motorola Mobility was filing against other Android device manufacturers. Imagine if the Android manufacturers started waging patent wars against each other, on top of the Microsoft patent tax on Android.

      At that point, some of the manufacturers might decide paying $30 per device to license Windows Phone, writing your own mobile operating system, or abandoning the market completely might become more cost-effective than us
    • Except there's no basis in facts here. The judge has done something no court has *EVER* done. They basically legislated what people do via normal bargaining.

      Don't expect this to hold water for even a second once it gets appealed. There's no basis for such a decision. I'd be willing to bet any amount of money on that.

      Meanwhile, we have an article from Florian Mueller about a flawed premise: Microsoft's competitors. What else is there to say when you're quoting a fraudulent man paid for by Microsoft? I would

  • by h4rr4r ( 612664 ) on Friday April 26, 2013 @12:57PM (#43558259)

    I stopped reading when I saw the name Florian.

    He is a professional Troll, STOP POSTING HIS STUPID BULLSHIT!

    • by Anonymous Coward

      Seriously Slashdot editors. This guy is a paid troll. It's been proven on Slashdot repeatedly. PLEASE STOP POSTING HIS BLOG.

      Between this and Timothy's Quirky piece I am definitely leaving. (Yes yes I realize I'm an anonymous reader, have been for 10 years. Privacy/anonymity is a good thing right?)

    • by DickBreath ( 207180 ) on Friday April 26, 2013 @01:09PM (#43558513) Homepage
      Florian Microsoft is a paided shill. Don't quote him. He has a considerable record of being wrong. See Groklaw.
    • I think the most annoying thing about Florian is the knowledge that someone actually pays money for this behavior. I guess the point is to try to decrease the value of googles stock and... what exactly? Then they'll go out of business leaving MS, oracle, amazon, and apple to split up the territory?

      It's fucking absurd. Whoever is wasting money funding this guy should give it to me. For half of whatever they're paying him, I'll buy a windows phone. That seems like a much better return on their investmen
      • I wouldn't worry too long. With the amounts of money MS is losing (and the evidence they build against themselves for antitrust), they won't last very long at this rate, with investigations underway. Continuing to push for patent settlements at the same time as antitrust investigations into patent trolling is probably the worst decision to possibly make.

    • by dubdays ( 410710 )
      THIS. Why does this guy seem to end up as an "expert" in so many of these patent-related articles? The guy's an idiot and has been downright wrong so many times it's laughable. /., please let us filter out any articles with the word "Florian" in it. It would at least give me back a few minutes of my life every month.
    • by ebno-10db ( 1459097 ) on Friday April 26, 2013 @03:33PM (#43560449)
      It gets worse, the submitter is "Nerval's Lobster", and as a reader wrote the other day:

      [Nerval's Lobster] is a "Senior Editor at Slashdot," Nick Kolakowski [slashdot.org] (Twitter [twitter.com], Literary Gun For Hire [nickkolakowski.com]), who writes articles for Slashdot (and other places [huffingtonpost.com]) and apparently submits them under the guise of a "user" named Nerval's Lobster. Nerval's Lobster's submissions are "accepted" by the editors nearly every day, and always link to Slashdot's "Business Intelligence" or "Cloud" content... effectively passing off paid content as normal, user-submitted content.

      The full post (very interesting) is here [slashdot.org].

    • I stopped reading when I saw the name Florian.

      He is a professional Troll, STOP POSTING HIS STUPID BULLSHIT!

      And he's not even a good troll. What ever happened to Dvorak? That was some classic tech click trolling!

  • No. (Score:5, Insightful)

    by HaeMaker ( 221642 ) on Friday April 26, 2013 @01:00PM (#43558317) Homepage

    How many lawsuits have been avoided because Google now has a formidable patent portfolio. Was the money spent on a nuclear arsenal wasted because there was no actual nuclear war?

    • Re:No. (Score:5, Insightful)

      by darkain ( 749283 ) on Friday April 26, 2013 @01:02PM (#43558369) Homepage

      Exactly. The portfolio isn't about MAKING money. It is about PREVENTING THE LOSS OF MONEY.

      http://en.wikipedia.org/wiki/Risk_management [wikipedia.org]

      • Re: (Score:2, Funny)

        by Anonymous Coward

        Well, at 12.5 Billion dollars, they just failed miserably at preventing the loss of money.

        • maybe you should see how often they win lawsuits, and how they are making money hand over fist quarter over quarter. Google doesn't mess around.

          Let me tell you who isn't doing any of the above (as in success):

          the entire group that is colluding against google, aka oracle/ms/apple, among others.

          You can almost pinpoint their exact downfall to the moments with which they declared google an enemy and stopped investing in new technologies.

      • by alen ( 225700 )

        no, it was extortion

        Moto was threatening to sue other android phone makers unless google coughed up the cash. that's why the former CEO left as soon as the sale completed.

        in the end most of Moto's patents are FRAND. the kind where they declare them to different standards organizations and agree to tiny royalties for whoever asks
        the others are easy to get around

        • proof/cite from a valid and honest website?

          I've never heard of moto threatening to sue their competitors.

  • by Anonymous Coward

    Seattle judge, Microsoft is located in Redmond near ... (hint 15.3 miles away)

  • I sincerely hope it turns out to be a big one. Gotta take the profit out of speculation somehow.

  • by Sushubh ( 2908401 ) on Friday April 26, 2013 @01:01PM (#43558343)
    You do not take his words seriously. Google has bigger plans for Motorola. Some of which we would see later this year. They need Motorola for a possible situation where Samsung forks Android away. Patents are a big part of the deal but I doubt Google thought that they would recover their investments through royalties. Loads of people said acquiring YouTube was a mistake. Just give it a year or two. Microsoft paid 7 billion dollars for Skype. Around the same for aQuantive which they now admit was a bad move! Google paid same for Motorola Mobility and I am sure it is worth much more (IP and assets).
    • Google's purchases tend to be investments. Youtube, Android, Doubleclick, etc. all took years to develop into a viable product and bring in real returns. There's no reason to expect Motorola's going to be any different. If I were a betting person, I'd put money on something coming out of this purchase in two or so years.

      Microsoft made several such smart purchases in the past as well. Not so much recently though.

  • There is a lot more going on at Motorola Mobility then that lawsuit.

    • Do you mean the layoffs, more layoffs, and $250 million a quarter in losses?
  • Beside the point. (Score:5, Interesting)

    by OmniGeek ( 72743 ) on Friday April 26, 2013 @01:09PM (#43558507)

    Two important things are missed here:
    1) Google mainly bought the patent portfolio for defensive purposes, not as revenue engines in themselves. The point of the suit is that MS wants to use the patents without paying for them. It's basically a move in the MS-vs-Android war.
    2) The judgement doesn't pass the smell test. Read the articles over at Groklaw for the details, but the judge here is ruling that Motorola must accept patent pool rates for a pool they don't belong to, rather than negotiate rates using the methods of the group they are a member of. The whole proceeding has been slanted toward the home team (MS) the judgment seems to be very much an overreach, and probably won't survive appeal.

    • Google is a member of MPEG-LA. As part of that, they agreed to put their patents in the MPEG-LA pool. When Google bought Motorola, those patents went in the pool.
      • by Anonymous Coward

        That was MS theory yes, Judge did not agree though.

      • by Anonymous Coward

        Nope, and frankly MS didn't even make that case, or it's not mentioned in the summary and judgement. Besides this case started prior to that acquisition anyway.

    • by jonwil ( 467024 )

      One big reason for Google to be interested in Motorola is that, at the time Google bought them, Motorola was making a LOT of noise about using its patent portfolio to go against not just Microsoft and Apple but other Android vendors as well. Which would have hurt Android and hurt Google.

      Buying Motorola allowed Google to end that threat.

  • Hardware patents which require actual innovation, research, and significant funding aren't worth very much. Software patents, which seem to often be pulled out of one's behind without much thought, are worth billions of dollars and are strong enough to shut other companies down. Hardware patents? Pennies and no leverage against infringers. What a joke this patent system is. True innovation is left essentially unprotected, whereas trivial, obvious "inventions" get massive, industry crushing protection.

  • Google/Motorola Mobility might actually have to manufacture and sell a product to justify their capital expenditure! The horrors!

    Also, I agree with posters above, I thought the patent portfolio aspect of the deal was a defensive one.

  • How can payments over a three year period on the patents alone, from one infringer no less, be worth more than the company was valued? We need more judges like these that just use common sense.
  • by perrin ( 891 ) on Friday April 26, 2013 @01:26PM (#43558747)

    I've been following this site since before it had user accounts. It has really been a downhill ride in recent years. It is more and more just about click-whoring.

    This article is a case in point. Slashdot editors must know by now that Florian Mueller is a professional troll who is paid to spew FUD about his clients' enemies in the media. That the editors do not care, since FUD articles apparently are click magnets, just makes me feel nauseous about coming back here.

    There are so many more intelligent commentaries about this ruling that could have been posted instead.

  • Sergei: "Uhh, Larry?"
    Larry: "Yes, Sergei?"
    Sergei: "I, umm... I misclicked."
    Larry: "On what?"
    Sergei: "Motorola. I was browsing Corpazon and I accidentally clicked the 1-Click Buy button for Motorola."
    Larry: "How much is that?"
    Sergei: "12.5 bils..."
    Larry: "Meh, just keep it. Not worth the bother to cancel that."
    Sergei: "Alright... I guess we might be able to use them for some of our Android stuff."
    *Larry shrugged*
  • Epic fail (Score:5, Insightful)

    by Anonymous Coward on Friday April 26, 2013 @01:33PM (#43558871)

    Quoting Florean Mueller that is.

  • by andydread ( 758754 ) on Friday April 26, 2013 @02:04PM (#43559331)
    It seems this submission is garbage.
  • Google now has a handset maker in house, which gives them certain advantages in the mobile market beyond the patent portfolio.

    Google's acquisition of Motorola Mobility is certainly more honest than Microsoft's ongoing stealth assimilation of Nokia.

    • by mlts ( 1038732 ) *

      There is always the Armageddon option. Say Windows Phone 9 becomes such a best seller that everyone (ZTE, Huawei, the people who make Blu phones, and Samsung) join the bandwagon. Android will still have a future and a guarenteed roadmap.

      For consumers who just want the coolest thing, this isn't a big deal. However, for the enterprise where they want to know that a device investment won't result in useless items, this is important. Android developers are also assured that there is a future for the OS, no

    • You would think, however Nexus 4 was an epic fail in delivery leaving a lot of frustration from consumers. Also why Google branded an LG/Samsung phone for Nexus and has not yet branded a Motorola phone for Nexus is beyond me, there isn't even a rumor that its in the works.

      I don't think Google knows what to do with Motorola.

  • If you're buying a company because you expect it to win big in IP lawsuits, you're doing a bad thing.

  • At least, not a mistake for Motorola shareholders. They made out like a bandit on that deal.

  • It was the royalties per se, but to protect the Android environment. If Apple had it's way they'd LOVE to kill Android. But they can't because Google hold mobile patents that could end Apple's iPhone and IOS product.
  • Out of one side of their mouth they argue that Moto's couple of dollars/device is a totally outrageous licensing fee, given the % of a said device's capability relies on the patents involved (as if being able to play video and do wireless hardly matters to an Xbox) ... and out of the other side, negotiate - only under NDA, of course, because darkness fears the light - for on the order of $15 patent licensing fee for each Android devices, for what the temporarily-courageous Barnes & Noble leadership show
  • "if the best Google can earn from those patents is a few pennies-per-unit from its rivals' products, that may undermine the whole idea of paying $12.5 billion primarily for Motorola Mobility's intellectual-property portfolio".

    In this day-and-age patent portfolios are bought so as to protect you from getting extorted by the other fella, as such it was a good buy.

Any sufficiently advanced technology is indistinguishable from a rigged demo.