With one $12.5B deal it gets two weapons: a manufacturing arm and a rich IP portfolio
Google's (GOOG) announcement Monday that it has agreed to buy Motorola's recently spun off mobile devices business -- listed on NASDAQ as Motorola Mobility (MMI) -- for $12.5 billion could mean one of two things.
Either Google really wants to get into the Android manufacturing business -- putting it into direct competition primarily with Apple (AAPL), but also with Nokia (NOK), Research in Motion (RIMM) and Hewlett-Packard (HPQ), the other vendors that make both mobile operating systems and the devices that run on them.
Or Google really wants the 17,000 patents and 7,000 patents pending that Motorola has assembled over the years, including what CEO Sanjay Jha recently described as having
"particular strength in 2G and 3G essential, non-essential patents important to the delivery of competitive products in the marketplace, video particularly compression, decompression and security technologies and finally, a leading position in 4G LTE essential." (link)
We'd put our money on the acquisition as a patent play.
As Motorola has discovered with its unprofitable Droid smartphones and Xoom tablets, selling Android devices in Apple's shadow is a cutthroat business, with tough competition and razor-thin margins.
By contrast, the values of telecom patents like the ones Motorola owns are rising faster than gold, and Google -- whose portfolio is particularly lacking -- needs them desperately. As Larry Page put it on Google's official blog:
"Our acquisition of Motorola will increase competition by strengthening Google's patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies."
The Wall Street Journal noted Monday that shares of Interdigital (IDCC), which had soared on rumors that Google might be bidding for its patents, are down 20% in pre-market trading. If Google gets Motorola, why would it need Interdigital?
UPDATE: The Journal's Shira Ovide helpfully notes that the word "patent" came up 24 times during the conference call Google held to explain the deal to analysts.
Tablets will become more "fun" and "portable" and prices will come down as well.
Motorola (MMI) CEO Sanjay Jha told investors today that the company will expand its webtop device lineup to include all high-end Google (GOOG) Android smartphones by the end of the year. Motorola is one of the few companies that has put all of their efforts into Android. "Webtop" is a new class of device that refers to MORESeth Weintraub - Feb 28, 2011 3:59 PM ET
A Tweet from a trusted Android insider sparks speculation that Motorola will be the launch platform for Google's new tablet OS.
Motorola has long been rumored to be building a tablet based on Android 3.0 OS. In August, Motorola (MOT) and Verizon (VZ) were linked to an Android tablet project aimed at bringing Verizon's FiOS TV service to mobile users. At the time, reports said the 10-inch tablet was due by MORESeth Weintraub - Nov 15, 2010 9:37 AM ET
A new tech wizard is fighting to return the ailing cellphone maker to relevance with a slate of new phones–and help from Google.
It's been more than a year Sanjay Jha left wireless chip maker Qualcomm (QCOM) to come to Motorola (MOT). As co-CEO of Motorola (along with Greg Brown), he took on a task even the private equity firms had passed on: saving the iconic handset division. Just as he MOREJessi Hempel, writer - Sep 29, 2009 11:55 AM ET
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