Google’s decision to first acquire Motorola Mobility, and
then sell it off to Lenovo, was effective and well thought out. By gaining
control of Motorola’s mobile patents, which are invaluable to Google in its
patent defense of the Android operating system, and then selling off Motorola’s
unprofitable operations and IP, Google was able to transition from maintaining
a defensive stance in the smartphone patent war to being able to prosecute its
competitors for patent infringement.
Google acquired Motorola in August 2011, purchasing it for a
total of $12.5B USD. At the time, Google justified their acquisition of
Motorola by explicitly stating
that “Motorola Mobility’s patent portfolio will help protect the Android
ecosystem,” among others. At the time, Motorola had $3B in cash, in addition to
some 17,000 patents. Google later sold one of its acquired divisions for $2.4B,
but had reported operating losses for Motorola totalling ~$1.7B over its
lifetime as a part of Google.
Lenovo acquired Motorola from Google for $2.9B in January
2014, to mixed reactions from across the tech sector. Most notable
tech reporters and analysts felt that Google had taken large losses on its
Motorola acquisition, even though Google retained the majority of Motorola’s
all-important patent portfolio. On the other hand, analysts generally felt that
Lenovo would become well-positioned
to succeed in mobile with the Motorola brand behind it, comparing the acquisition
to Lenovo’s purchase of ThinkPad from HP in 2004 for $1.75B, after which Lenovo
grew to become the world’s largest PC maker in 2013.
Overall, Motorola remained profit negative under Google, but
was heavily restructured, and had its product portfolio simplified and reduced
to the Moto X and Moto G. The Motorola that Lenovo purchased includes about 2,000
patents, with Google with the vast majority of Motorola patents for use in its
ongoing patent litigation suits.
While Google took a loss in its acquisition and sell-off of
Lenovo, the patent portfolio that it is keeping is priceless. Through its
Motorola-acquired patents, Google can now more successfully defend the Android
ecosystem, increasing the competitiveness of the smartphone operating system
marketplace and providing consumers with more choices and options.
I further discuss my thoughts on this topic at the following link:
https://www.youtube.com/watch?v=AX2BndwlDKE
I further discuss my thoughts on this topic at the following link:
https://www.youtube.com/watch?v=AX2BndwlDKE
Hi Albert,
ReplyDeleteWell thought summary. I would like to think different about your argument of Google increasing the competitiveness of the smartphone operating system marketplace. Google indeed is providing more mobile device options for consumers, but also accelerating the increasing market share of Android in the mobile operating system territory. It is increasing competition but also sucking up all the mobile os market. That's why Apple and Microsoft are taking litigable actions.
I wouldn't say it's bad, in fact, as a consumer I would love to see more selection of digital devices than needing to stick with AT&T or Verizon.