Date: Thursday, January 30th, 2014, 19:29
Category: Android, Business, Finance, Google, Mobile Phone, Patents
This Wednesday, Google CEO Larry Page announced that they were selling off its Motorola Mobility division to Lenovo for $2.91 billion. Google had acquired Motorola in 2012 to help boost development of Andoid, with speculation that they would use it to create more of its own branded hardware and ecosystem. At the time, Google paid $12.5 billion to acquire Motorola and its cache of patents. Apparently the division was not fulfilling its promise, hence the sell-off. However, what appears to be a huge loss for Google may not be so bad after all.
As Michael J. De La Merced points out in a New York Times article, perhaps Google didn’t make out as bad as everyone thinks. What isn’t obvious when looking at the big number is the fact that Google acquired a number of assets from Motorola, including the aforementioned patents, about $4 billion in cash and tax credits, and the sale of Motorola’s set-top box business. De La Merced also addresses important details about the sale agreement and the effects of Google’s ownership for the last 2 years;
“In a regulatory filing in 2012, Google disclosed that it valued Motorola’s overall “patents and developed technology” at about $5.5 billion.”
“Under the terms of the deal announced on Wednesday, Google will hold onto the bulk of Motorola Mobility’s patents.”
“Of course, these calculations ignore the strategic benefits Google has enjoyed from the deal. It locked up important patents to defend its Android ecosystem, while climbing into a position to pick the right strategic partners for the Motorola hardware businesses.”
However, he also reflects that Google’s figures may not be as favorable as they think.
“Last year, Microsoft claimed victory in its dispute with Motorola over the value of standard essential patents, when a judge determined that a reasonable licensing rate for some patents was a shade under $1.8 million a year.”
One thing that was revealed sometime after the announcement that the deal was concluded is that Google would also retain Motorola’s Advanced Technology Group. This division has been responsible for developing some of the more conceptual technology that Google likes to look into like a lie-detecting neck tattoo and a medical sensor that a patient swallows to relay information to doctors. While the ATG isn’t producing revenue currently, its forward-thinking may pay off in future Google products. Lenovo seems to think the acquisition will give it some competitive leverage in the mobile space, but that remains to be seen. That’s probably something we should keep our eye on.