I have to thank Kai Gray for giving me some inspiration to actually sit down and write about this.
Twitter was abuzz the other day about the recent acquisition of Motorola by Google, evoking various reactions from Sector 930 faithful, but I think the best response/reaction was summed up by Edwin: “Google just bought Motorola?”
To me, this was a line-item. I saw it on Twitter and said to myself, “well, that’s interesting,” but didn’t really think too much of it because I have an iPhone. As it turns out, Apple (and Microsoft) have more to do with Google’s deal than meets the eye.
At this point, the Android vs. iOS battle seems to be coming to a stalemate of sorts, with RIM and Microsoft trying to keep up like fat kids at a track meet. Realistically, to consumers, there’s only “so far” a company can go to remain competitive with another company, and I mean that on the hardware and software side. You can argue the strengths and weaknesses of having an Android device against having an iPhone all day without having a clear winner. I’m not even going to talk about Windows Phones.
Yep.
In July, Google decided that the next logical step would be to place a bid for the patent portfolio of the now-defunct Nortel. Obviously, patents become a significant competitive advantage for technology companies; every time Apple patents something, MacRumors goes nuts. Some quick Google searches will tell you that a lot of Apple’s iOS technology is patented. A lot of the news I’ve seen about tech companies lately has been about patent lawsuits, and so on. Google saw Nortel’s dissolution as a chance to get a lot of patents without having to do any of the research work themselves; convenient for Google, as they don’t seem to really do much work outside of their advertising business. Android is open source. Come to think of it, “not doing much work” sounds pretty good; I’m sure I’d fit right in at Google. I’d probably be a good Google Street View driver, except I’d get lost and need to look up directions…on Google Maps. But I digress.
So here’s where it gets interesting: Google puts out a bid for Nortel’s patents, (big stuff: wireless, 4G, etc) at $900 million. Nortel puts out a deadline for higher bids. A consortium of companies, led by Apple, but including Research in Motion (the BlackBerry folks), Microsoft, Sony, and Ericsson, decide they’re going to band together and place a counter-offer. This went back and forth for a while, until Google placed their final bid: $3.14159 billion, or pi, rounded to 5 places.
By now, it should’ve been clear that Google was up to something, but nobody really seemed to think much of it, except for the consortium, which put out a bid for $4.5 billion and won the patents. Of the total purchase price, Apple put up $2.6 billion. The Nortel folks were understandably and pleasantly surprised. Around this time, Google fired back, saying the “patent war” was a “hostile, organized campaign against Android.” You can read more about this in the official Google Blog post: “When patents attack android.” Interesting stuff.
So Google turned around this week and bought Motorola, for $12.5 billion dollars, which again seemed weird on the surface. There’s a lot of nay-saying, but ultimately, this was the big “fuck you” to Apple, Microsoft, and the like. Naturally, with the purchase of Motorola come Motorola’s patents; all 17,500 of them (with 24,000 pending patents), and, if you didn’t know, Motorola kind of invented the cell phone. You don’t have to take my word for it, just listen to Larry Page, CEO of Google: “our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio.” Veni vidi vici.
You might think that Apple or Microsoft or RIM might’ve come back to dump on Google, but they can’t do that without looking like idiots, because they’ve been tooting the patent horn for a long time now.
Since the deal, Google’s stock has plunged, but if you ask me, this would be the time to buy. It wouldn’t surprise me if Google can do for Motorola what it did for YouTube, and they (Google) executed this deal very smartly. We’ll see what the future holds for Google, Apple, and the cell phone…war…I hate that term, but it’s been an interesting few weeks for the technology industry and I’m sure it will continue to be so.
I expect a due response from Charlie.