for those who said buying Motorola was all about the patents...
buy yourself something nice tonight, you earned it, you gypsies, you.
Lenovo has signed a deal to buy the loss-making Motorola Mobility smartphone manufacturer for $2.91bn, but a switched-on Google is keeping the patents owned by the firm it gobbled two years ago for $12.5bn. "The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will …
buy yourself something nice tonight, you earned it, you gypsies, you.
Indeed. All the 'Made in America' bollocks was always bollocks anyway.
Cynicism wins again, as it usually does.
Finally, even the most fanatical Google cheerleaders will have to stop trying to claim to the rest of the world that the Motorola purchase was about manufacturing.
It seems to have been a cunning plan by Google management to take over $9 billion outside and set fire to it! I guess they're doing their bit to reverse QE...
OK, OK. I know the patents must be worth something. But it ain't $9.5 billion...
I assumed they were after the patents, but wanted the hardware division as well, otherwise why didn't they sell it earlier? It seems bizarre to buy a company you don't want, with no idea how to get rid of it, when it's losing you over $1 billion a year.
I guess it's like a mate who's into motor racing. He bought a 60s Alfa Romeo, in decent race condition, because it had a racing sump that he wanted for his. His 'cunning' plan was to swap the sump with his, give the car a nice polish, and sell it on for a profit. Well the first two bits worked anyway... After a year of having it in a lock-up garage, and hiding the purchase from his wife, he finally managed to get rid for a classified amount less than he paid. At least it was his money to waste, not his shareholders'. Ooops! As the saying goes: Q. How do you make a small fortune in motor racing? A. Start with a large fortune.
Except when Motorola was carrying some losses which Google can claim against their taxes etc.
And now it is about the name, at least for the US market.
They also sold the set-top box arm straight away, so it was a little less than $9 milliard for the patents.
I know the tax losses are huge as well, I was being a bit silly on the $9bn loss. Over $2 bn since they owned it, and I believe they're allowed to use the 5 years of losses up until then as well. So that's got to be close on $10 bn total to write off against profits.
So I guess that's $3bn odd corporation tax advantage and $4bn odd for sell-offs. Can they also claim a loss on the sale price? If not $2.5bn still seems a bit steep for those patents. It's a strange way to run a railroad...
Well, it would be, if Google actually paid taxes.
except I believer the majority of Google cheerleaders were expecting exactly that to happen.
I've yet to see a Motorola smartphone in the UK. Maybe they are still a household name in the US but in the UK, they're only famous for the Razr.
Which taxes are those? I thought Google didn't pay tax anyway.
This is an interesting way to keep Google's OEM partners happy, while giving the Chinese Lenovo, yet another American company. Has this become the United States of China?
You may have been living under the rocks for the last fifteen years. The US has been floundering due to a persistent infection of welfar-warfarism, which the doctor says is increasing and may well lead to arteries clogged by inflation a bit later.
Of course, all this China-vs-US talk is just so much mercantilist blather. This is companies we are talking about, at least nominally.
Google wanted to keep the OEM partners happy and none of them too dominant - so now Samsung has some more significant competition - can't imagine they are happy about this deal.
"Has this become the United States of China?"
The news from the same day:
Samsung Agrees To Stop Copying Core Google Apps On Android Devices
No, the US and much of the Western world is suffering by "financial and executive inflation". To inflate their earnings beyond what they could spend in two or three lives, they're trying to squeeze every cent they can from labor - and if it means to send everything manufactured or engineered to Far East they do, as long as they can pay themselves enormous bonuses at the end of each year - firing more people if needed - while trying to elude taxes using any hole in the rules they can find.
In turn, people who lose their job or find just less and less paid ones (and even engineers wages were kept lower using illegal secret agreements) ask for welfare subsidies to stay afloat - and politics will do because executives of companies paying for their campaign need people to stay quiet, and not start to ask for better salaries and more jobs - and avoid being asked to pay taxes like everybody else, because it would impact "shareholder value", and that's the real "First rule" dominating the US today.
Add that some executives in companies who need to sell weapons need some war here and there to extract more and more money from taxpayers (of course companies that pay little taxes don't care...) will support paranoid politicians who find enemies everywhere and keep on fueling the idea that US is in a "war against terrorism" and thereby everything should be allowed, including spying on everyone - but on Wall Street guys, it looks, or they would have known they were going to throw most of the economy in the dust bin because of pure greed.
As quite obviously, Google are a development company, not a manufacturing company.
Is this really so hard for people to work out? Sure they bought Moto for the patents too, but that was only because of Apple and Microsoft's patent games.
Google was invited to be a part of the Rockstar consortium, but they declined. Why did Google bid on the Nortel patents alone, rather than along with Apple, Microsoft et al, if they wished to own those patents for defensive purposes only?
"Is this really so hard for people to work out? Sure they bought Moto for the patents too..."
It was well beyond the understanding of some people here. Besides the usual run-of-the-mill cluelessness, there were even comments suggesting that Google bought Motorola for the sake of abolishing the US patent system. No, I don't know how that was supposed to work either.
"but that was only because of Apple and Microsoft's patent games."
It was Google who evidently thought that patents and patent infringement are some sort of "game". Why you would think that protecting one's IP is some sort of a game would probably make for a tedious and pointless discussion, though.
If it's to defend its customers against the other members of the consortium, then it wouldn't have worked. The other members wouldn't have agreed to a blanket licence to anyone implementing Android.
Remember that they never sued Google directly, only it's customers.
>>"Remember that they never sued Google directly, only it's customers."
That's because Google came up with the genius idea of monetizing the _use_ of their product rather than the _selling_ of their product. So they are free to infringe on others' patents whilst others have to shoulder the costs of licencing those patents. All the while Google still makes money off infringed IP. And they still get to control Android itself by subverting the Open Source principles of it with all sorts of "soft" controls on it:
Good article on the last point for any interested:
Google is a data collection company - not a development one. It just develops what helps its main business, often adopting and adapting something developed elsewhere (Linux, Java...).
Anyway Google tasted how difficult is to run an hardware biz today - stealing data from users is simple, designing, manufacturing and selling good hardware is much more difficult.
"Google is a data collection company - not a development one"
If you're splitting hairs then technically they're a advertising company. Data collection/development are the processes by which they target/sell more ads.
That's a lot of suing.
If IP lawyers were quoted on the stock market.... OH ORGASMIC!
Google already sold parts of Motorola (set-top boxes?), and got a massive tax bill reduction thanks to "tax assets" of Motorola. I'm told the final cost of the patents was $2.5B, though I did not check numbers.
Indeed. People constantly overlook (including a certain Florian Mueller who spouts so much drivel it's unsurprising) that Motorola had $3billion in cash when it was bought. That, plus the $2.something billion they got for the set-top box division significantly reduces the headline "loss" they've made on selling. That said, Motorola did lose money after Google bought them, but much of that wouldn't have been cash and Google can use the loss elsewhere to lessen their taxes further.
Probably did end up overpaying for the patents still, but by nothing like what people are making out.
Interesting. If Motorola had $3bn cash, doesn't that make the patents free (or nearly so)? There's a lot of losses to set against tax. Possibly billions of corporation tax savings. $4-5 bn in selling the set top boxe and phone divisions. It doesn't take much tax write-off for those 3 to come to £9.5bn...
I knew I should have trained to be an accountant when I had the chance. There's gold in them thar hills!
Good insights, AC. I didn't remember a lot of that. :) +20 internets to you.
"Under the terms of the deal Google keeps almost all of Motorola's intellectual property,"
Which makes $9.5bn for the patents which were already proven to be incapable of deterring Apple's and Microsoft's infringement lawsuits when Google bought them.
On the upside, however, the fact of Google's divestiture of Motorola might serve to allay any fears of other Android handset makers of having to compete with Android's owner. That can only be a positive.
However, there is every reason to wonder why either Lenovo/Motorola (Motonovo? Lenorola?) or Samsung would want to continue to use Andriod instead of cobbling together their own OS - Lenorola-Motonovo for the sake of not competing directly with Samsung in the low-margin Android space, and Samsung in order to capture more value by running their own app stores and ad networks - and either would, in that case, avoid the IP problems with which Android is encumbered.
And start fresh with no apps? That worked really well for Blackberry.
Which IP problems are those?
The one's Samsung introduced on it's own with it's additions to the OS?
The ones presumably they would also add to any OS of their own?
Or the truly groundbreaking ones that are worthy of protection like how a list scrolls on the screen when you move it with your finger?
OOoooo or text entry auto correct when used on a touch screen instead of a physical keyboard!!
As I sit down at my desk once more to independently design some GUI elements, DP algorithms and UX behaviours, sure in the knowledge that I'll have violated 50 patents (totally worthless and obvious) and IP (utterly undeserving of protection) before my first dump.
>Which makes $9.5bn for the patents which were already proven to be incapable of deterring Apple's and Microsoft's infringement lawsuits when Google bought them.
It's impossible to determine what they deterred - like many you forget that all of Apple's early work with smartphones including the first Apple Smartphone (remember that?) were co-developments with Motorola - the actual details of IP arrangements never been made public
It's only $2.5Bn when you break it down in any case - that's about 20 days worth of Google Ads at the current level.
Sounds like its days may be numbered.
It's worth it, I've recently got one and it's a very good budget smart phone.
+1... with the exception of the display, it's easily as good as my One X and in some respects - notably HSDPA signal retention in borderline areas (like my bloody desk) - it's noticeably better.
I have just picked up a dual SIM Moto G in Singapore and its an excellent phone. Just need to root and get rid of the Google spy apps.
Why would Lenovo axe it? It has put Motorola back on the map.
It's a pity in a number ways. There were signs that Motorola was turning itself around. Both the Moto X and the Moto G are excellent phones at very good prices. However it is not clear how being owned by Google contributed to that process.
Firstly how much did they gain in privileged access to the Android development map? Certainly the Moto G was ahead of the curve in terms of Android updates and the Moto X had its speech processor which seemed to point to the way Google wanted things to go. Unfortunately they will probably lose that advantage now. You can also question whether the very competitive price was down to Google's big pockets and the willingness to make a loss to increase market share
Secondly they made a big thing about being made in America. While that doesn't play much in the rest of the word, the states was a big market for Motorola where Apple is still dominant.
Saying that I am not one of those who thinks Lenova will be bad stewards and strip the present products out and replace them with Chinese clones. They have shown with the thinkpad purchase they are willing to maintain quality. Also it does open up the China market to Motorola.
But all in all I think Samsun and LG will be pretty happy with this deal
All the plonkers whining that if Nokia would have been far more successful if they had 'gone Android' look really clever now. Even bladdy Google cannot make any money from selling Android devices.
I really, really cannot wait for the 'Samsung fork' that kills Googles mobile spyware operation once and for all. Cannot come soon enough for me.
Or they can drop Android and concentrate their efforts on their Windows phones.
After all, that strategy has done wonders for Nokia.
That strategy has done wonders for Nokia's shareholders. Who else would have bought their failing phone division off their hands? It had finally lost its competitive advantage on the low-end phones to China and Samsung, after years of very successful supply chain fancy-footwork. And at the same time management had seen the smartphone era coming for a decade, got all the research done to lead it, but then forgot to actually finish any of their 5 (or was it 10?) competing smartphone OSes. Had they gone Android, there's a good chance that the shareholders would have to fund the redundency payouts for everyone, and years of expensive restructuring. Rather than dumping it all on MS, and letting them take the risk.
Whats the suggestion? Nobody can make money from Android devices?
You mention Samsung in your post so I suppose you know they exist?
I remember the arguments at the time of the buy. The shrillest shrills came from those shouting how all those android phone makers would run away because it's obvious google would develop all the best bits for itself and keep them out of the loop.
Surprise, surprise, didn't happen.
Good. Maybe Lenovo will finally turf the pants firmware for the NVG510 and come up with something reasonably decent.
I honestly thought the Moto G was the start of something interesting, and that Google were going to keep Moto, losses and all. Oh well that's probably why I'm not an industry analyst. Mind you, it's not as if I get these things wrong any more frequently than they do.
You make it sound like a religion.
Even before it would have occurred to me that they might buy Moto. The Lenovo brand is already trusted via their care of the Thinkpad franchise. No reason they can't turn around Motorola, assuming they make music with the telcos. Of course one might hope they would by-pass those 'stards -- who wreck products with their half-*ssed bloatware before we even get our hands on them.
My only worry is that Lenovo will protect their name's cachet by kicking off with premium prices, rather undermining my reason for welcoming our new Chinese overlords.
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