Today Google announced (blog, press release) announced it would buy Motorola Mobility. In order to have access to the extensive Motorola patent portfolio, Google has offered to pay $12.5 billion, "a premium of 63% to the closing price of Motorola Mobility shares on Friday, August 12, 2011." According to the Google press release:
The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.
Mary-Jo Foley, who covers Microsoft for Zdnet, has a story about the acquisition here, quoting the increasingly shrill anti-Google voice of Florian Mueller. Floiran has been tweeting up a storm today, issuing statements such as "For Android device makers Google's Motorola deal is potentially very bad news. They'll have to compete on a non-level playing field then." Mary-Jo Foley mentioned that Motorola had threatened to make a deal with Microsoft, so its hard to see that Google had much choice but to start spending more more to defend Android in the rapidly escalating mobile patent wars.
Needless to say this is a gamechanger in the mobile world, as Google moves down the stack, and is no longer just an operating system provider meaning it competes directly with Apple as well as the various other handset makers who currently use Android.
What's more, one of the biggest arguments in favor of Apple's continued to dominance is that without a complete end-to-end "stack", no other platform could compete with its integrated software/hardware setup.
Bear in mind that Google has over $35 billion in cash, so this answers one question about what they'll do with it. The company still has tons more dry powder.
Other handset makers, like RIMM and Nokia are both up pre-market on the news as the focus obviously turns to Microsoft: Is it now forced to buy one of them? Or does Microsoft benefit because the remaining handset makers (Samsung, etc.) now turn more towards Windows?
This from the behind the paywall story by the WJS's Matt Jarzemsky and Shara Tibken:
HTC said Monday that it supports Google's acquisition, and that it would benefit from the promotion of Android phones. It also said its partnership wouldn't be affected by the deal. Samsung and LG declined to provide an immediate comment.
This from Jeff Jarvis, posted to Google Plus
The Google/Motorola deal is lawyer repellent. Or rat poison, if you prefer. It is a tragic and wasteful by product of our screwed-up patent system. Just this year, $18 billion is being spent not on innovation and invested not in entrepreneurship and growth but instead in fending off lawsuits. Damn straight, we need patent reform.
Having said that, this is good for Google and Android and its ecosystem. That's why HTC, LG, and Sony all released statements praising the deal. bit.ly/qfmMVt Google isn't going into competition with them. Google is buying them protection to defend against Apple, Nokia, and other patent holders and legal thugs.
Real Dan Lyons sees a link between Apple's bidding for the Nortel patents, and the just announced deal for Mortorola.
Google just sandbagged its rivals. The whole thing was a rope-a-dope maneuver. Google never cared about the Nortel patents. It just wanted to drive up the price so that AppleSoft (those happy new bedmates) would overpay. Today, with the Motorola deal, Google picks up nearly three times as many patents as AppleSoft got from Novell and Nortel. More important, Google just raised the stakes in a huge way for anyone who wants to stay in the smartphone market.
Better yet, Google got its rivals to spend a few weeks defending the practice of using patents to attack other companies. Apple fanboys bent over backward to say that Apple was doing the honorable thing here by suing everyone in sight. All this slimy patent warfare that is so despicable when others do it becomes magically noble when Apple does it. Teaming up with other companies, including the evil Borg, to gang up on Google is all perfectly legitimate, par for the course, smart business practice, blah blah.
So now Google fires back, makes a huge acquisition, gets into the hardware business, buys up the best IP portfolio in the mobile space — and can position itself as a victim that’s just trying to defend itself against this gang of bullies. The Nortel auction just helps Google get approval for the Motorola purchase.
From a rundown on other commentary, see Robert Scoble's collection of quotes and links here.
In related news, last week there was an announcement that Twitter and Cisco have joined the Open Invention Network (OIN). The Steven J. Vaughan-Nichols report in Zdnet.com included this background on the OIN patent pool.
The OIN was formed in 2005 by IBM, Sony, Philips N.V. and Linux distributors Red Hat Inc. and Novell. Then, as now, the group was created to defend Linux from patent trolls and other attacks from patent holders. It tries to do this with its own patents which are then available royalty-free to any company, institution or individual that agrees not to assert its patents against Linux. While it hasn’t been done, these patents could also, in theory, be used by the OIN, or an OIN member, against a hostile company in a patent war.
After years of slow, steady growth, OIN has been growing significantly in the last quarter. During the second quarter of 2011 alone, OIN had 35 new companies join its community of licensees. The consortium now has 360 corporate supporters. OIN licensees, which include founding members and associate members, benefit from leverage against patent aggression and access to enabling technologies through OIN’s shared intellectual property resources. . . .
That’s why, besides Cisco and Twitter, other major companies that have recently joined the OIN include CentOS, Data-Warehouse, Fujitisu, and Nationwide Mutual Insurance, Even so you might wonder why Cisco, which has a few patents to call its own, would join up. Keith Bergeit, OIN’s CEO, speculated, “OIN believes that Cisco became a licensee to support for Linux as Linux has apparently become increasingly relevant to the core Cisco business.”