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