Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Was buying Motorola a costly mistake or a clever move?

Was buying Motorola a costly mistake for Google, or a clever move?

AUCKLAND – February 12, 2014: News that Google is selling Motorola has sparked media commentary that this acquisition was a mistake – but is that really the case?

The initial price tag for Google to buy Motorola was US$12.4 billion. It has since recouped US$2.35 billion through the sale of the set top box business, and will receive a further $2.9 billion for the hand set business (provided this is approved by regulators).

With a whopping US$7.15 billion between the purchase price and assets Google acquired – a figure which doesn’t even take into account the hefty loses Motorola ran up while under Google’s ownership – the numbers certainly don’t seem to stack up.

However, the key is that Google is retaining the majority of the patents that came with Motorola. So why is it holding onto those rights, yet selling the hardware divisions of the Motorola business?

I would say the answer is that those patents are seen internally at Google as a key strategic asset.

There is bound to be a close connection between the inventions protected by these patents and the direction Google will take for its expanding mobile software business.

In addition, there is the potential for the patents to be used in a retaliatory infringement dispute with competitors. That will help to protect Google and the cell phone makers using its software, while expanding a core aspect of its business.

Google probably placed a higher premium on the Motorola patents than many analysts, as the company likely understood that to continue growing in the mobile technology space it needed a way to fend off restrictive patent infringement actions.

Given the potential growth and revenue from that market there was an urgent need to play catch up and prepare for attacks. These factors all contribute to why Google was prepared to pay such a high price tag for Motorola.

The tech giant’s rapid expansion shows that it knows what it is doing. I’d back Google as having made an informed decision on the correct price to pay for Motorola; only it knows the details of the Motorola patent portfolio and how that can be leveraged.

The media focus is now on Lenovo’s expansion into the cell phone market, and it is being lauded as a company to watch. However, I wouldn’t under estimate Google. Those in the mobile technology industry should be wary - the cell phone wars are definitely going to heat up!

Regardless of how the cell phone industry develops, this scenario highlights how a strategic patent portfolio can provide significant value.

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Fossils: Ancient Penguins Lived Alongside Dinosaurs?

Penguins are much older than previously thought and their evolution probably dates back to the days of the dinosaurs, according to research on the fossilised leg bone and toes of a giant ancient penguin found in rocks near Waipara, North Canterbury. More>>

No Voda/Sky: Commission Declines Clearance For Merger

The Commerce Commission has declined to grant clearance for the proposed merger of Sky Network Television and Vodafone New Zealand. More>>

ALSO:

EARLIER:

Power: IEA Report On New Zealand's Energy System

Outside of its largely low-carbon power sector, managing the economy’s energy intensity and greenhouse gas emissions while still remaining competitive and growing remains a challenge. More>>

ALSO:

NASA: Seven Earth-Size Planets Around A Single Star

NASA's Spitzer Space Telescope has revealed the first known system of seven Earth-size planets around a single star. Three of these planets are firmly located in the habitable zone, the area around the parent star where a rocky planet is most likely to have liquid water. More>>

ALSO:

Auckland Transport Case: Men Guilty Of Corruption And Bribery Will Spend Time In Jail

Two men who were found guilty of corruption and bribery in a Serious Fraud Office (SFO) trial have been sentenced in the Auckland High Court today... The pair are guilty of corruption and bribery offences relating to more than $1 million of bribes which took place between 2005 and 2013 at Rodney District Council and Auckland Transport. More>>

ALSO:

Hager Raid: Westpac Wrong To Release Bank Records To Police

The Privacy Commissioner has censured Westpac Banking Corp for releasing without a court order more than 10 months of bank records belonging to the political activist and journalist Nicky Hager during a police investigation into leaked information published in Hager's 2014 pre-election book, 'Dirty Politics'. More>>

ALSO:

EARLIER:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news