Google bought Motorola Mobility for $12.5 billion, sold it for $2.9 billion, and it was definitely worth it

In 2012, Google completed its biggest purchase in history with a $12.5 billion Motorola Mobility acquisition. Just 2 years later, Google kept the patents and sold Motorola for $2.9 billion to Lenovo. Did Google do the math right? Is this really a wise decision?

Let's take a look at the run down of the numbers done by ZDNet, who has analyzed the case quite thoroughly.

Upon purchasing Motorola for $12.5 billion, Google received $2.9 billion in cash from Motorola. Soon afterwards, Google offloaded Motorola Home, Motorola's set-top box division, along with some patents to Arris Group for $2.35 billion. Motorola's patent portfolio (mind you, there are well over 24,000 patents) is valued at a rather conservative price of $5.5 billion. After doing some subtracting and taking the $2.9 billion Lenovo paid Google into account, Google has actually made roughly $1.1 billion as a result of this seemingly irrational selling price. This also means Google paid less than $4 billion for Motorola’s entire patent portfolio after the sale. In fact, Google's gains from Motorola are much grater than this monetary value.

First off, by keeping the vast majority of Motorola's patents, Google is forever equipped with a shield of protection against future lawsuits. In the increasingly competitive and patent-war driven smart phone market, having a reservoir of patents to retaliate against litigations when needed is highly useful. Secondly, Google has chose the right timing to execute the sale. Given that the company reported fourth quarter earnings couple weeks back before the sale took place, it dodged the responsibility to mention hardware profit margins and whether the smartphone unit was profitable.

Despite selling Motorola at 1/4 of the price it was purchased, Google still managed to make a billion dollar return off of it. Well played once again, Google.

Google's acquisition of Motorola Mobility

On August 15, 2011, Google bought Motorola Mobility for $12.5 billion -- this deal marked the biggest acquisition for Google in its history. Dennis Woodside, the newly appointed CEO of Motorola Mobility by Google, claimed that the aim of the purchase was "to focus Motorola Mobility's remarkable talent on fewer, bigger bets, and create wonderful devices that are used by people around the world." Sure, that was nice of Google to say, but what exactly was Google's true motive behind this purchase?

Let's first take a look at the market conditions around the time. In the year 2011, Google was heavily involved in a series of patent infringement attacks from its major competitors such as Apple and Microsoft. As a means of self-defense, Google decided to take in Motorola Mobility specifically for its robust patent portfolio. At the time, Motorola Mobility was a spin-off of Motorola and held over 24,000 patents and pending patent applications worldwide. With these newly acquired patents, Google immediately was equipped with a surge of "weapons" to not only protect it self but also start its counterattack and retaliate against its previous litigations.

Some industry experts even believed that Google was targeting much more than just a patent mine. As a result of the acquisition, Google was moving into Apple territory. Buying Motorola Mobility granted Google the ability to control both hardware and software and enabled them to manufacture its own integrated smartphones and other devices. "With this acquisition Google can also come up with equivalent of Apple TV, Roku, and tablets," says Sandeep Aggarwal, an analyst at Digital Route.

Though it came at a hefty price, this acquisition is quite a strategic move for Google move in terms of warding off patent attacks and fostering long term growth. Well done, Google.

Read more here: http://patentlyo.com/patent/2011/08/googles-purchase-of-motorola-mobility.html

Apple Trolled by German Patent-Holding Firm

On top of its on-going patent war with Samsung, Apple is hit with another $2.1 billion patent lawsuit -- this time from Germany.

German patent licensing firm IPCom has accused Apple of infringing upon its patented technology that enables iPhone's emergency phone-dialing feature. The firm claims that it is the only rightful owner of the IP used in the chip that makes emergency calls such as 911 possible and is demanding $2.1 billion in damages from Apple. However, this piece of technology is used by nearly every mobile phone and almost always required by law. Interestingly enough, IPCom has previously filed the same lawsuit against mobile companies such as Nokia, HTC and Ericsson for the same reason, but unfortunately none of these firms has been successful in getting the European Patent Office to declare the patent invalid for being a standard requirement. As the victim this time around, Apple has agreed to attend the hearing taking place on the 11th of February at the Mannheim Regional Court in Germany.

As if the patent wars among mobile giants aren't chaotic enough already, patent assertion firms like IPCom are looking to join in on the fun and most importantly profit. As discussed in class, patent lawsuits can be a highly profitable practice for some as huge sums of money are involved. Companies like IPCom (what critics refer to as patent trolls) do not actually create patents -- they simply buy patents and make a profit by claiming royalties on them and suing other firms. Since IPCom was founded in 2007, it has built up a portfolio of almost 1,200 patents in mobile communications. Luckily, companies like Google and Apple are beginning to fight back as they push forward a legislation that would put a stop to patent trolls through the U.S. Senate. 2014 will sure be a big year for patent law reform.

Samsung vs Apple - March Edition

This never-ending patent war between Samsung and Apple is sure about to get even longer as the companies prepare for their March trial in San Jose, CA.

So what are they suing each other for this time around?

With some research, I have broken down the case and provided very limited explanations for the technology behind some of the patents involved to the best of my ability. But some of the concepts are hard for me to grasp as they pertain to more advanced engineering practices, so if you want to understand them better, I suggest you do research on your own! 

This time, Apple is suing Samsung for its technologies in user interface, specifically for infringing upon the following patents:
1) data tapping - the feature that allows an iPhone to retrieve relevant data in response to user searches, bring it to the surface and let the user perform further action with the data found. For example, if you are looking for a phone number, the iPhone will be able to find the relevant data, bring it to your screen and allow you to make a phone call and such with it.
2) Siri-style unified search
3) asynchronous data synchronization 
4) auto-complete functions 

Samsung on the other hand is suing Apple for violating some of its underlying technology. Several main complaints include:  

1) nonscheduled transmission over enhanced uplink data channel 

2) signaling control information of uplink packet data service

3) recording and reproducing digital image/speech 

4) remote video transmission systems 

Both Samsung and Apple are suing each other over older product lines, many of which are no longer available. Apple is targeting devices such as the Galaxy Admire; the Galaxy Nexus, the Galaxy Note & Note II and etc while Samsung is directing its attacking older and more recent Apple products such as the iPhone 4, 4S and 5; the iPad 2, 3, and 4 and etc. Though many of the products involved are on the older side, the outcome could affect current and future products such as the iPhone 5s and the Galaxy S5. For products still in stores, the result could affect their availability. 

Source: http://www.informationweek.com/mobile/mobile-business/apple-samsung-patent-battle-round-2/d/d-id/1113722