Analyzing Google's Motorola Mobility Move

Publisher's Outlook

Analyzing Google's Motorola Mobility Move

By Rich Tehrani, CEO, Technology Marketing Corporation  |  October 01, 2011

Google this summer purchased patents as part of the acquisition of Motorola (News - Alert) Mobility – 24,500 of them to be exact. That gives the deal a $12.5 billion valuation, which puts the value per patent at $510,204 apiece. But the search giant also gets 19,000 employees on top of the 29,000 it already has.

The question is: Does Google want these employees or to manage a business that is so different from software and advertising that it makes your head spin? I recently spoke with Kris Kendrick of Sonus, who used to be with Motorola, and he sees this acquisition as Google picking up the hardware “wedge” into software.

But I just can’t see Google wanting this hardware business; and if the Google does want to enter this space, picking up Motorola seems odd, as the company has had management issues for more than a decade. Although Motorola has always had great technology, it has never been able to execute properly. After all, when Apple (News - Alert) collaborated with Motorola on a cell phone, it was a flop. It was so bad, in fact, that Steve Jobs realized how dysfunctional cell phone makers were and subsequently embarked on his own phone design.

Yes, Motorola can boost Google TV. But, again, I don’t see it. Does Google want to get into the low-margin hardware business, especially after failing with the Nexus one – a phone of its own design, manufactured by HTC?

It seems far more likely that Google wants to open source everything Motorola has and do it for the express purpose of having a platform across phones and televisions where it can show its ads. The best way to do this is to white label everything Motorola makes, and to OEM it all to the tech ecosystem.

With all these new patents, Google has ample protection from Oracle, Apple and Microsoft (News - Alert).

As Paula Bernier recently reported in Next Generation Mobility magazine, a new title TMC launched in September, interest in patent ownership is clearly building in the world of communications, including over-the-top service providers. That became clear earlier this year when we witnessed the battle royale for the patents of now-defunct telecommunications equipment provider Nortel. Google, which in April made a $900 million stalking-horse bid for the patents – some of which relate to the fourth-generation mobile technology known as LTE – lost out on this treasure trove of intellectual property. Apple, Microsoft, EMC, Ericsson (News - Alert), Research in Motion and Sony were the victors in that case, collectively winning something like 6,000 patent assets for $4.5 billion.

In the wake of the Nortel patent fight, Bernier reports, the search giant snagged about 1,000 patents from IBM. And in August Google added Suzanne Michel, a top patent lawyer at the Federal Trade Commission, to its legal team. An FTC (News - Alert) employee for more than 11 years, Michels wrote a recent patent examining the U.S. patent system and how it could help promote innovation.

So getting its hands on more intellectual property in an attempt to protect its products and solutions from legal challenges is clearly a focus for Google, among others.

Now that Google has purchased Motorola Mobility, the hard work begins of taking products that are generally sold to or via service providers and instead wholesale them in the hopes of taking Android to the next level and moving up market with regards to hardware design.

There are many moving parts here, and I am looking forward to seeing how Google proceeds with this major purchase.

Rich Tehrani is CEO of TMC. In addition, he is the Chairman of the world’s best-attended communications conference, INTERNET TELEPHONY Conference & EXPO (ITEXPO). He is also the author of his own communications and technology blog.

Edited by Jennifer Russell