Google Buy Motorola

[Tutankhamun]

Official Google blog post.

Analysis from Dan Frommer:

Google buys Motorola, patents, and an Android business model for $12.5 billion

Huge and totally unexpected deal, but it actually makes sense. Here’s Google’s blog post (“Supercharging Android”) and press release for the deal.

If the Feds let the deal go through…

• Google would own all of Motorola’s patents, and could license them to (or just share them with) other Android licensees if it wanted to. Motorola invented the cellphone almost 30 years ago, so this is worth a lot.
• Google would now be in the position to build totally integrated Android devices, designing both the hardware and software and marketing. This is one of the reasons Apple devices are so well-rounded, so it could mean better Android devices and stronger competition for Apple going forward.
• Google would finally have a real business model for Android! Instead of just giving everything away for free for a cut of advertising revenue, Google is now in the position to bring in hundreds of dollars of revenue and profit per smartphone sold, the way other companies do.
• Google would also be in the position to experiment with some more ambitious and disruptive initiatives. This could range from new sales and distribution techniques to ad-subsidized phones.
• Google could force Microsoft to make a bolder move, such as potentially buying Nokia or RIM.

I’ll have more analysis and coverage all day. Stay tuned.

SplatF.com

Pretty big deal, I guess this will be the end for some Android OEM's in the near future.

 

[[DT]]

Wow! So they bought Motorola Mobility, the cell phone spin off, leaving Motorola Solutions to continue with their non-cell phone business. Yeah, I can see Google suddenly having an end-to-end product, but it does put some interesting things in motion in terms of the OS outside of Gotorola phones ...

 

[mickice]

If Microsoft buys Nokia i'm done with Nokia phones. Simple as that.

 

[R3D D3V!L]

I'm guessing Motorola's UI will be ditched in favour of vanilla Android. I'm guessing this also means the end of the Nexus line of phones.

 

[Tutankhamun]

We can't say for sure what they'll do but presumably they'll have Motorola produce Google phones, so they may keep the Nexus name but it will be produced by Motorola instead of Samsung(?). Furthermore, I think the patents Motorola has was a bigger deal for Google than getting a hardware team.

 

[R3D D3V!L]

Samsung made the Nexus S and HTC made the Nexus One.

 

[weskurtz81]

Google is apparently a rare exception when it comes to patent use, they use them primarily for defense rather than offense. Apple and Microsoft often use them to go after people. I think Tut hit the nail on the head when he said they were after the patents. However, it will be VERY interesting to see where they go with the hardware.

 

[[DT]]

re: hardware, like has been pointed out, they've created a brand of sorts around the Nexus name, so they could easy make a Nexus M (heck, they could take the Atrix, rebrand it, drop Blur ... tada!)

What will be interesting is how this effects the competition - you know, that this purchase suddenly created. Apple doesn't source their OS, so no issues, Microsoft (so far, "strategic alliances" aside) is just an OS company (in the phone context), though with Nexus Google did dabble in the hardware market.

You can bet MS is watching this carefully with their checkbook out waiting to write a check to Nokia...

 

[Tutankhamun]

Let's say MS buy Nokia, who's buying RIMM?

--

Horace Dediu asked a good question:

If Google *really* wanted to get into the hardware business, why didn't they buy the cheaper and better and more popular HTC?

@asymco

Only explanation is patents.

I don't think Google would spend so much money to buy patents they won't use, they'll start suing. Only reseaon they haven't so far is they didn't have an impressive portfolio.

 

[[DT]]

Because HTC isn't cheaper. [2010 figures] They show ~$9.6B revenue with $1.4B net income and $2.6B in equity vs. Moto Mobile, $11.4B, no profit and are $1.76B in the RED.

http://en.wikipedia.org/wiki/HTC_Corporation

http://en.wikipedia.org/wiki/Motorola_Mobility

HTC is also projecting a $35B Market Cap, vs. the current (and dwindling MM of ~$11B). Both are of course a reflection of my initial post, i.e., factoring in revenue, operating expense, net and total equity.

 

[weskurtz81]

[QUOTE="Tutankhamun, post: 5634250]Only explanation is patents.

I don't think Google would spend so much money to buy patents they won't use, they'll start suing. Only reseaon they haven't so far is they didn't have an impressive portfolio.[/QUOTE]

I don't know about the bold part, who would they be suing and why? I haven't seen anything out of Google before that suggests they are going to get litigious, unless they are defending themselves.

 

[MjW]

wow! Google is getting aggressive. I was very surprised when I read about it. It does make sense though.

 

[Tutankhamun]

[QUOTE="weskurtz81, post: 5634258]I don't know about the bold part, who would they be suing and why? I haven't seen anything out of Google before that suggests they are going to get litigious, unless they are defending themselves.[/QUOTE]

They may need to sue the likes of Apple and Microsoft etc to defend their OEM's since OEM's have been hit hard in patent disputes.

Because HTC isn't cheaper. [2010 figures] They show ~$9.6B revenue with $1.4B net income and $2.6B in equity vs. Moto Mobile, $11.4B, no profit and are $1.76B in the RED.

http://en.wikipedia.org/wiki/HTC_Corporation

http://en.wikipedia.org/wiki/Motorola_Mobility

HTC is also projecting a $35B Market Cap, vs. the current (and dwindling MM of ~$11B). Both are of course a reflection of my initial post, i.e., factoring in revenue, operating expense, net and total equity.

@danielhedlund Cheaper in the sense that they would be buying a money maker not a money loser.

@asymco

Also consider this:

Reminder: Motorola Mobility sold more feature phones (6.6 million) than smartphones (4.4m) last quarter.

@asymco

[QUOTE="weskurtz81, post: 5634258]I don't know about the bold part, who would they be suing and why? I haven't seen anything out of Google before that suggests they are going to get litigious, unless they are defending themselves.[/QUOTE]

They may need to sue the likes of Apple and Microsoft etc to defend their OEM's since OEM's have been hit hard in patent disputes. If they don't they run the risk of losing OEM trust.

 

[[DT]]

[QUOTE="Tutankhamun, post: 5634374]

@asymco

[/QUOTE]

I already saw that (I saw your Tweet specifically asking about it ) and it's a little short sighted analysis of "cheaper". In the short term, Google pays less [period], and in the near future term, gets Motorola profitable by leveraging their own OS and the patents they scored, plus reorganizes and puts some of their business processes to work internally, etc.. HTC with their projected value, would've cost Google 3-3.5X Motorola, and even with their revenue, that would've taken quite a while to offset the initial purchase price (plus how would HTC's MS mobile presence been managed...). HTC is only "cheaper" if you project current market values and revenues out several years without any consideration of how Google will restructure and leverage the "value" they purchased.

 

[Tutankhamun]

But do you really think Google will be able to make Motorola more profitable than HTC? I doubt that.

 

[[DT]]

[QUOTE="Tutankhamun, post: 5634404]But do you really think Google will be able to make Motorola more profitable than HTC? I doubt that.[/QUOTE]

Now *that* is a good $12.5B question! I think Google thinks so ... even if they write off their debt, they must think (like some of my ruminations above), that they can return them to profitability and get a return quicker vs. someone like HTC who would take several years even at the current profit they're turning (because of the up front costs).

Seems like Motorola was "good buy", since they've got deflated value, a huge range of patents, solid tech ... Google gets the latter two at a discount! It's obvious Google saw _something_ in Motorola's portfolio that made sense. Hell, maybe it doesn't matter where they start if this is just Google's play to pull "an Apple", and they figured the mix of what they get from MM was a good balance of several things.

BTW, following you on Twitter now ... or stalking ... whatever .... hahaha....

 

[Tutankhamun]

If they wanted to pull an Apple, why keep Motorola outside Google and let them run themselves? Apple's strength is that they do everything in-house. Sure is an interesting deal that's for sure.

Following you back!

 

[[DT]]

[QUOTE="Tutankhamun, post: 5634439]If they wanted to pull an Apple, why keep Motorola outside Google and let them run themselves? Apple's strength is that they do everything in-house. Sure is an interesting deal that's for sure.

Following you back![/QUOTE]

Wait ... what? Oh no ... my ... Tweets ... so ... lame ....

:lol:

 

[TrUe GaMeR]

Since Apple and MS were already suing Motorola, I fail to see any change that's going to happen. It seems Motorola's 17,000 patents hasn't deterred Apple and MS from suing them.

Now Apple and MS can finally sue Google directly along with all the other android OEMs.

Basically Google can't protect the OEMs. At least from what I'm seeing.

 

[weskurtz81]

[QUOTE="Tutankhamun, post: 5634374]They may need to sue the likes of Apple and Microsoft etc to defend their OEM's since OEM's have been hit hard in patent disputes.[/QUOTE]

Ok, I see what you are saying, basically the same thing I said, Google would use them for defense, not offense.

 

[weskurtz81]

Double Post

 

[weskurtz81]

And, apparently HTC only has 58 US patents, which is why Apple is trying to crush them in court. I bet that played into why Apple didn't want to buy HTC, not nearly as many US patents as Moto.

 

[[DT]]

Hey Wes, are you still shopping Apple as a notebook option?

 

[Tutankhamun]

[QUOTE="weskurtz81, post: 5635181]Ok, I see what you are saying, basically the same thing I said, Google would use them for defense, not offense.[/QUOTE]

Well, now they kind of have to. If they don't, they lose the risk of pissing of OEM's that then think they are giving Motorola benefits they don't have.

[QUOTE="weskurtz81, post: 5635621]And, apparently HTC only has 58 US patents, which is why Apple is trying to crush them in court. I bet that played into why Apple didn't want to buy HTC, not nearly as many US patents as Moto.[/QUOTE]

So we can assume patents we're as, if not bigger, a big of a deal in this acquisition as having a hardware company?

 

[squirrelbo1]

So we can assume patents we're as, if not bigger, a big of a deal in this acquisition as having a hardware company?

Undoubtedly


squirrelbo1 is Tapatalking