Lenovo-Motorola deal: For Google, it's still all about the patents

Lenovo-Motorola deal: For Google, it's still all about the patents

Summary: For Google, buying Motorola was always about assuming a defensive patent position. The smartphones were just a throw-in.

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It's official. Lenovo has bought Google's smartphone business for $2.91 billion.

Some people found this surprising. Not me. I said it before, I'll say it again. For Google buying Motorola Mobility in 2011 was all about building up its patent defenses.

Billionaire investor Carl Icahn nailed it in mid-2011 when he said that Motorola Mobility with 17,000 approved patents and another 7,500 in the pipeline had "one of the strongest and most respected patent portfolios in the industry."

The phones? The Google-Motorola Mobility deal valued them at "next to nothing." So, far from losing money on the deal, the $2.91 billion for Mobility's smartphones and the $2.35 billion Google already got for selling Motorola's TV set-top box business, Motorola Home, were pure profit.

As Google's chief executive Larry Page said in his blog post on the deal, "Motorola’s patents have helped create a level playing field, which is good news for all Android’s users and partners." And, he added: "Google will retain the vast majority of Motorola's patents, which we will continue to use to defend the entire Android ecosystem."

True, Motorola's patents haven't been worth as much in the patent wars as Google had hoped. But patent wars take years to resolve. They may yet prove their value in future lawsuits. 

In the meantime, Google's patent portfolio has shown its value outside of the courtroom by helping to make patent agreements with Ericsson as well as Samsung. These patents have already shown their worth.

At day's end I see this deal as being a win for both Lenovo and Google. The former gets an instant in to the highly competitive smartphone market while the latter gets more cash while retaining the patents the initial acquisition was all about in the first place. The money Google makes from the Lenovo deal is just icing on the cake for the search giant. 

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Topics: Mobility, Google, Legal, Lenovo, Patents, Smartphones

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16 comments
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  • It was never about the patents.

    Motorola brilliantly forced Google into buying it. At a 60% premium too.

    Read the facts and argue against them if you can.

    http://www.fosspatents.com/2011/09/these-four-threats-against-android.html
    Englishmole
    • Thank you, was about to point out the same.

      "This isn't a defensive purchase in the sense of Google becoming strong enough to retaliate seriously against its strategic rivals (mutually assured destruction). It's defensive-defensive in the sense of merely attempting to prevent an exacerbation of the Android patent situation due to what MMI was going to do otherwise."

      Motorola was threatening to sue other Android OEMs at the time and even collect royalties. Google knew Android didn't have a chance of wining against Motorola's patent in court so they moved fast to scoop them up.

      http://www.fosspatents.com/2011/08/motorola-doesnt-have-license-to-kill.html
      dave95.
      • Wait... what?

        Did... did you seriously just link to the website of the guy who committed perjury... you know... outright lying while under oath... during the initial Oracle v. Google courtroom battle? The same person that was later forced to admit that he was just repeating what he was PAID to say, rather than to state facts or conjecture based on his own reasoning?

        You're seriously going to link to anything Florian Mueller has to say?

        Really?

        REALLY?

        I'm sorry. I'm... just. Stunned.

        You know. When most people find out that anybody is willing to commit perjury for a paycheck, they tend to run the hell in the opposite direction. You might want to seriously consider giving that some thought.
        Liaison.Rocks
        • So argue the facts then

          It doesn't matter what you feel about Mueller, the four points contained are matters of historical fact and easily cross-checked from most business publications.

          Now, would you care to argue them, or just have another screaming rant?
          Englishmole
          • Google's purchase motivation is irrelevant -- a good move in the end

            Google purchased Motorola for 12.5 billion, but Motorola had $2.9 billion cash on hand when Google bought it -- so the net purchase price was 9.6 billion. Google sold Motorola's set-top box business for $2.35 billion. That brings the effective price down to $7.25 billion. Google sold Motorola to Lenovo for $2.91 billion. For the remaining $4.34 billion, Google kept Motorola's Advanced Technology Group most of Motorola's 24,500 patents (17,000 approved and 7,500 in the pipeline). Not bad considering the Rockstar consortium purchased 6,000 Nortel patents for $4.5 billion.
            teancum144
          • And yet -

            If they'd properly licensed all of the technology in Android before release, they wouldn't have been forced to buy Motorola in the first place.
            Cynical99
      • Say what?

        You do realise the original article states that 3 of the 4 reasons were patents?

        Whether for sell-off, offense/defense, it's still about the patents. Lets face it, is Motorola adopting windows phone a massive threat? So the 3 strongest threats are patent related.

        So it's all about the patents?
        Little Old Man
    • The Vote-Spam Bot's here again...

      The moderator isn't going to be very happy about the false flags he'll be receiving...
      ForeverCookie
  • Put another way...

    ...Google spent $9,500,000,000 - almost three times what the Rockstar consortium paid for the Nortel patents - on IP that has offered little or no defence against any action brought against it. Nor, for that matter have they brought any success when used offensively.

    And the author sees this as a win for Google?
    Englishmole
    • Actually $4B. The original 12.5B was revised up to 13B it cost them

      And no Ichan didn't nail it. The patents have been worthless so far. Everyone that sued moto has won and everyone who's been sued BY moto has also won. The worth of motos patents, those that aren't soon to expired, has been vastly overrated.
      Johnny Vegas
      • Isn't it interesting, Johnny...

        ...that you and I both have 16 flags against us without any intelligent counter-argument?

        There's a lot of pro Google emotion out there - but not so much pro Google case.
        Englishmole
        • Maybe

          it's because your argument is overly simplistic and ignores a vital point;

          What would have happened if the patents had gone to someone else?

          Google doesn't do offensive patent battles, go read up on it, motorola fight was already in progress but got the sign-off from google. So monetising them that way, nope, or not yet. You can predict the future then?

          Let me try and break it down for you, if google holds patents, they can't be used against them, so to say they haven't been any benefit defensively is retarded.

          Beyond that, I'd say armchair commentary on the business dealings of multinationals based on tech blogs - not the most sensible. Unless of course you can confirm you position that allows you access to every detail of google's day to day running. You know for sure that none of the patents were used to fight off UNREPORTED attacks by other patent holders? You know for sure that every cross-licensing deal was reported in your blog of choice?

          It's one thing to comment, it's another to turn it into a black and white "I know for certain because I read the internet". I may be wrong but I think you know very little of what goes on the tech world and the deals done. Not every company airs their dirty laundry in public every time.
          Little Old Man
          • No, LOM

            The most important point is that the patents have proven - defensively and offensively - useless.
            Englishmole
  • Yes, it was always about patents

    Google was forced to buy something, anything to defend Android against a litany of patent suits because Google was so arrogant that they didn't bother to obtain permission for anything at all in Android.

    It's about the patents and nothing else.
    Cynical99
  • "Pure profit"

    Is that seriously how you describe selling the remainder of the company for significantly less than you paid - even less than they spent to acquire Nest for God's sake - and keeping the patents that have brought in hardly any income?

    Buying Motorola was a financial disaster to Google. It cost them a fortune and they've got peanuts in return. They've basically just lost their patience waiting for things to pick up and cut their losses while the business still has any value left.
    SupaRawr93
  • I think this is a good thing for Motorola and Android

    Google's ownership of Motorola was holding Motorola back. Google couldn't give Motorola a break in producing the next Nexus devices or any preferential treatment for fear of alienating the other OEMs. And Motorola has lots of good tech in the new Moto X phones, they just weren't sold outside of the US for the most part. The Moto X's Touchless Control and Active Display are innovative and useful. Now with Lenovo's expertise in making inexpensive hardware, their global marketing reach, and their growing enterprise product range (see sale of IBM server business) I think Motorola and Android are going to get a good shot in the arm. Lenovo is already the third-largest smartphone maker in the world and are going to be motivated to make Motorola a big name again in smartphones especially in the US.
    cooldoods