Why Google bought Global IP Solutions

Why Google bought Global IP Solutions

Summary: The strategic answer is Android. The flip answer is "because it could." There's something to the flip answer.

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TOPICS: Networking, Google
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The strategic answer is Android. The flip answer is "because it could."

There's something to the flip answer.

Global IP Solutions (GIPS) signed a deal to provide its technology to Motorola's Android phone just last week. GIPS had anounced its VideoEngine for Android in April, becoming the first to offer voice chat on the platform.

(GIPS spokesman John Gallagher used this caricature on his blog post announcing the deal. Before joining GIPS in 2006 Gallagher edited The Irish Herald and before that ran interference for Macrovision, now part of Adobe. Note Gallagher's green jacket. I'm O'Donnell on my mom's side.)

The deal covers GIPS' VoiceEngine Mobile software, which was also added a week ago to LG's Fixed Mobile Convergence bundle. At the time of that deal, LG explained that GIPS' Acoustic Echo Cancellation (AEC) implementation was crucial to improving the quality of voice calls.

Separately GIPS signed a deal with Cisco's WebEX unit, which does videoconferencing. On signing of that deal May 10 it was noted GIPS has over 20 patents pending or approved.

There are other good strategic fits, as Stephen Shankland of CNET notes in his DeepTech piece about the deal. He called GIPS a "VoIP and videoconferencing" company. Very true. GIPS' technology is inside AOL and Yahoo's videoconferencing offerings.

Which brings us to the flip answer.

Google is paying a 27% premium on GIPS' current price, making its Scandinavian VCs, Kistefos Venture Capital AS and Kistefos Venture Capital II DA, pretty happy. But even with the premium, the total price is $68 million. Google is paying cash. For a company worth north of $162 billion, that's seat cushion money.

Nonetheless there was hard bargaining. Marketwatch reports GIPS last traded in January, saying at that time it would be "making a public announcement of strategic interest from a potential buyer." The price is 142% over the price at that time. Other media outlets reported the lower premium based on the more recent close.

This too is good news for Google. The last thing you want to look like when your pockets are stuffed with cash is like someone whose pockets are stuffed with cash looking for a good time. Google is in the position Yahoo was in during the 1990s, when then CEO Tim Koogle (no relation) made people like Mark Cuban billionaires.

Given that all these deals were announced long after GIPS announced it was negotiating the sale of the company, my guess if everyone knows who they were really dealing with all along. Google didn't just swoop in on folks who were running away.

Topics: Networking, Google

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26 comments
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  • RE: Why Google bought Global IP Solutions

    I'm waiting for the inevitable day when Microsoft tramps on a patent that Google owns. Is Google laying down land mines? :-)
    tburzio
    • Probally, not. Besides, MS has their own mine fields

      It's possible that Googlge's already standing in it, MS just hasn't decided to turn it on yet. :)
      John Zern
      • Yes They Have Tested It! ;)

        @John Zern Oh yes John, they sure have tested it. But they found out all they did was hurt themselves. The first test results were damage to their own inner office walls. However they did find out that the system enabled Steve Balmer to launch attacks from 20 feet across the room at Google. Worse still was the damage to Balmer's high blood pressure and only threatening to KILL Google. He admitted he'd done it before too.

        But when you try to pinpoint who that was, it really could be anyone in 1000's of Microsoft's competition under their own "Embrace, Extend, Extinquish" company policies! :D

        But now back to Steve's missed shot at Google. The chairs didn't even come close to hitting Google. They didn't even hit their former employee who just announded to Steve he was going to Google to duck having chairs thrown at him by Balmer! ;)
        i2fun@...
      • RE: Why Google bought Global IP Solutions

        Read the rest of our Google Voice series:
        Linux Love
      • RE: Why Google bought Global IP Solutions

        Google Voice: a step-by-step primer on ditching your land line while keeping your number
        Linux Love
      • RE: Why Google bought Global IP Solutions

        Google Voice: the ultimate iPhone how-to
        Linux Love
      • RE: Why Google bought Global IP Solutions

        Google Voice: beyond Gmail. Get voicemail and texts using any client you want
        Linux Love
      • RE: Why Google bought Global IP Solutions

        Google Voice: how to consolidate your virtual phone numbers (this article)
        Linux Love
      • RE: Why Google bought Global IP Solutions

        A cheapskate?s guide to cheap VOIP
        Linux Love
      • RE: Why Google bought Global IP Solutions

        Configuring a complex home office
        Linux Love
      • RE: Why Google bought Global IP Solutions

        e decided to ?rescue? our long-valued land line phone numbers, one of which was the ?family? number and one of which was my office number (I work from home).
        Linux Love
      • RE: Why Google bought Global IP Solutions

        We chose Google Voice because we liked the idea of having numbers independent of the physical
        Linux Love
      • RE: Why Google bought Global IP Solutions

        location, and because we spent about four months commuting between homes (and never knowing
        Linux Love
      • RE: Why Google bought Global IP Solutions

        Obviously, we could give out our cell phone numbers, but we had lots of people who knew and
        Linux Love
      • RE: Why Google bought Global IP Solutions

        @John Zern That just can't be. Why, we've seen countless studies that prove that Linux is vastly more expensive, less reliable, etc. in the server room than Microsoft's offerings. These companies only think they're saving money.

        That, or they've figured out that someone is lying to them.

        Next thing you know, they might start wondering if the Received Wisdom might be wrong about the desktop, too.
        Arabalar
    • RE: Why Google bought Global IP Solutions

      @tburzio

      I think the demographics is telling. The number of students tracks the move in the chart. Also there's a rise in Financial Services participants.
      AlexSerdar
    • RE: Why Google bought Global IP Solutions

      @tburzio Yes of course it is no surprise that the use of Windows as a desktop operating system is falling in popularity with this education news and group. k l
      AlexSerdar
    • RE: Why Google bought Global IP Solutions

      @tburzio My guess is that as more and more people start using open source based development software stacks, the percentage contributing back will fall. Early adopters are enthusiastic and are more devoted to the cause. Many times the custom code that a programmer develops may designed specifically for their scenario. It takes time to document and deliver code that is consumable for the broader community. It's no surprise that the use of Windows as a desktop operating system is falling in popularity with this group. Linux has become a more viable option, and someone who believes in developing using a open source software stack is more likely to choose an open source desktop OS to work on
      Arabalar
    • RE: Why Google bought Global IP Solutions

      @tburzio WP7 has too many shortcomings to be of any use in business. An Office app is completely useless when there is no system-wide Copy-And-Paste. WP7 has poor networking, only able to use the HTTP protocol, thus no true VoIP. The list goes on and on. It's a phone for teenagers, not business users.
      Arabalar
  • RE: Why Google bought Global IP Solutions

    Does this mean that I will get Google Voice in NZ any quicker? Will this acquisition give Google a more world-wide reach with this service. Any thoughts?
    wezhind@...