Overall, it is looking like a highly questionable (and perhaps desperate) move:
…let’s be real: This deal could end up being a disaster.
Well, for starters, the deal creates major channel conflict: Google is now competing with its partners. And hardware manufacturing is an entirely different kind of business than Google’s core business. And hardware manufacturing is a crappy, low-margin commodity business. And Motorola is massive–Google has just increased the size of its company by 60%. And the deal appears to be purely a defensive move, not an offensive one. And so on.
Dan Lyons (aka Fake Steve Jobs):
…today it all makes sense. Google just sandbagged its rivals. The whole thing was a rope-a-dope maneuver. Google never cared about the Nortel patents. It just wanted to drive up the price so that AppleSoft (those happy new bedmates) would overpay. Today, with the Motorola deal, Google picks up nearly three times as many patents as AppleSoft got from Novell and Nortel. More important, Google just raised the stakes in a huge way for anyone who wants to stay in the smartphone market.
Better yet, Google got its rivals to spend a few weeks defending the practice of using patents to attack other companies. Apple fanboys bent over backward to say that Apple was doing the honorable thing here by suing everyone in sight. All this slimy patent warfare that is so despicable when others do it becomes magically noble when Apple does it. Teaming up with other companies, including the evil Borg, to gang up on Google is all perfectly legitimate, par for the course, smart business practice, blah blah.
To say that Google is going to face some opposition to its proposed $12.5 billion acquisition of Motorola Mobility is what you might call a bit of an understatement.
First of all, the deal will give a lot of fresh meat to the U.S. Federal Trade Commission, which is already investigating several aspects of Google’s business, including its Android mobile operating system business. As The Wall Street Journal reported last week, investigators from the FTC and from the offices of several state attorneys general have been exploring whether or not Google prevents phone manufacturers who become Android partners from using the smartphone operating systems of other companies.
Both Apple and Microsoft already have ongoing patent lawsuits against Motorola itself. These thousands of patents Google just acquired, while important, are not necessarily the full deterrent they need.
As usual, FOSS Patents has a great breakdown of all of this, if you’re really interested.
As for Lyons’ assertion that Google simply maneuvered the Nortel situation in such a way to drive up the price for their competitors — that’s laughable. If he would look over the court documents for how this played out, he’d see that Google itself bid upwards of $4 billion and at a few points, nearly won the auction for several billion dollars.
Both Apple and Microsoft (and Google, for that matter) have billions of dollars that really are burning a hole in their pockets. Eventually, they need to figure out how to spend this money. Does anyone think Apple is sweating dropping $2 billion (their reported share) on valuable patents when they have nearly $80 billion in the bank?
Overall, the theme across Android licensees’ initial statements is unwaveringly supportive at this point.
Considering that Google’s primary goal is to shore up Android’s shaky patent situation, that comes as little surprise — though the striking similarity in some of the messaging suggests that Mountain View may have applied some pressure to show a unified front today. Regardless, the ball will be in Google’s court going forward to make sure that these guys aren’t put at a competitive disadvantage against Motorola — a move that could drive them away from Android altogether and into alternatives like Windows Phone, as Nokia’s statement seems to imply.
And what about the folks that really decide: investors?
Well, today GOOG closed down 1.16%, MSFT closed up 1.63% and AAPL closed up 1.70%.
Disclosure: I am long AAPL.