The Truth About Google’s Purchase of Motorola

Sara Cunningham April 28, 2013 0


You have probably wondered why Google purchased Motorola Mobility for $12.5 billion. Google bought the patent by Motorola for such amount. It has been around 2 years since this deal was announced and it was a year since the deal was closed. However, is it really worth the price?

The Truth about Googles Purchase of Motorola 2

The Problem With Patent Case

Motorola’s patent portfolio appears not to be worth anything to what both companies assumed. In a patent case of Microsoft vs. Motorola, the judge ruled that Microsoft must pay a mere $1.7 million annual royalty for using the latter’s video-encoding and WI-Fi standard patents for every Windows 7 PC and Xbox 360 sold, instead of the $4 billion originally demanded by Motorola. Furthermore, a German court denied the injunction filed by Motorola over a patent against Microsoft. In addition, The ITC also set aside the remaining patent for the investigation of Motorola’s complaint against Apple in 2010. The patent in the case against Apple is based on a “sensor-controlled user interface for portable communication devices”. It was ruled by the ITC to be invalid.

The Value of the Motorola Mobility

It would take a long time for Google to recover the estimated $5.5 billion value of Motorola’s patent portfolio. Roughly estimated, it would take around 3,225 years for the value to be paid off. To add insult to injury, Motorola lost lots of patent cases around the globe related to standards. A source connected to the trial pointed out that “They’re (Google) 0-for-Motorola”. Granting the actual worth of the portfolio, it is close to zero.

This defensive measure against the litigious Apple seems to have failed. With the patent value and increasing pressure against using patents related to standards, it is true to say that the patent-related advantages and benefits to the purchase of Motorola Mobility is pointless. Google will want to buy heavy armor against lawsuits by Apple in the future but they have purchased a mere wooden shield instead. In any case, Google can gain profit by selling the patent again.

Alternative for Motorola Phones

As of the moment, the focus for development of Motorola handset units is not yet definite. They haven’t manufactured a killer Smartphone yet. There is no shadow of a Smartphone that would rule the market sales ever since Google bought the company. To make things worse, the manufacturing capacity of Motorola has been reduced. This could even cut the potential revenue. Truly, this is yet another “0 – for – Motorola”.

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