Their purchases are proactive rather than reactive. No wonder they're a market leader, huh?
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Apple CFO Reacts to Google/Motorola Deal
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Their purchases are proactive rather than reactive. No wonder they're a market leader, huh?
Its possible -- this is a big risk on Google's part. It's not like Motorola was making tons of money -- they were losing money or almost breaking even. I think Google was cornered (by Motorola) into doing this because the alternative was Motorola being acquired by Microsoft.
Since this happened I have felt that there has to be more to this than the patents. After all, Motorola's patents have done nothing to sway Apple and Microsoft from suing them -- they are obviously not scared. That could be partially because many of Motorola's patents that are most-important to the industry are encumbered with FRAND licensing requirements (i.e.: federal regulations require you license them at a fair rate to competitors).
I think this article sums up many of my misgivings about the "patent angle" that Google is publicly sharing. Certainly Google is not laying all their cards on the table with a move this big and this bold. Basically it boils down to the fact that the net acquisition of Motorola Mobility is costing Google about $9.5B (since Motorola had $3B in cash). Android is currently losing money for Google since they don't charge for the OS licensing and they only make $6 per Android user per year. Consider the cost of development, marketing, litigation with Oracle, and of course the acquisition of patents to defend Android, and then add the net cost of Motorola Mobility and you are looking at least about 10 year return on investment (or 1.5 years of search advertising revenue).
That is why I think Google is going to transition to manufacturing phones themselves and competing with their former partners. Every previous company that has attempted licensing its own software and then competing against it has failed in that endeavor (e.g.: Palm, Apple). Those who have tried it in the past have at least collected licensing fees from their licensing partners / competitors. Google is giving Android away -- I don't see how that model will make money for them and somehow succeed where Palm and Apple failed to license their OS and compete against it.
Anyway, there is certainly more to this acquisition than patents. If this was all about patents, then Google overpaid by a ton. Even if they plan on developing their own devices and going the "Apple route" as AllThingsD suggests, they still may have overpaid for Motorola, but were likely forced to make Microsoft think twice before outbidding them -- just like Google forced Microsoft to overpay for Skype. What goes around comes around.
I eat 12 billion dollars every morning for breakfast...
Yum.
Yup, this is what I got from it also. You can almost see the sarcasm tags in his statement...
Anyone saying Google overpaid needs to read this : http://www.economist.com/blogs/babbage/2011/08/valuing-patents
Basically, they paid less per patent (close to 2/3rd the price per patent) than the Apple led consortium that bought out the Nortel patents, and got an electronics business included in the deal.
Seems to me everyone is overpaying these days.
Basically, they paid less per patent (close to 2/3rd the price per patent) than the Apple led consortium that bought out the Nortel patents, and got an electronics business included in the deal.
Seems to me everyone is overpaying these days.
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I think he means he think that it's a lot to pay for motorola. But he would say that wouldn't he.
It's a big risk for google spending that much (half of their doe) trying to buy their way into being a major handset maker.
I think he means he think that it's a lot to pay for motorola. But he would say that wouldn't he.
It's a big risk for google spending that much (half of their doe) trying to buy their way into being a major handset maker.
"Apple CFO Reacts... " what was the "reaction"? He just made a comment, most likely (as someone else in this thread mentioned) said: "they overpaid!".
Chump change for Google. Android alone brings in about $220 million a quarter, and the latest 2Q MMI GAAP loss was $85 million and dropping.
That sounds more like Apple TV "hobby" money for a CEO.
For that matter, MMI still has over $3 billion in cash and equivalents. They could keep losing money for another ten years before that reserve is burned up. However...
MMI has publicly predicted returning to the black by 4Q 2011. We'll see.
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Don't do evil.
Google's motto of "Don't do evil" will be tough for them to honor when they need to fire 5,000 employees from MMI, in the middle of this bad economy, to make this deal palatable to their stockholders.
Google's motto of "Don't do evil" will be tough for them to honor when they need to fire 5,000 employees from MMI, in the middle of this bad economy, to make this deal palatable to their stockholders.
In terms of units sold, the RAZR did very well.
The issue was MOT took a high tier phone(for the time) with incredible margins, and offered end-user/retail rebates and increased carrier subsidies. The cost of the rebates resulted in a pretty large hit to the bottom line.
I think not. If they get bored of the loses they can just shut it down, or sell it for scrap, minus the patents of course. Also, how is the world's most popular search engine not a consumer oriented business? And I suppose Android is only used by businesses. LOL.
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Hmm, who is most likely to be right, Google or the people in this thread? I'm sure several people here run multi-billion dollar concerns.
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Please don't introduce facts into this discussion, it'll only get the fanboys riled up.
The thing is that Apple is where it is now because it's not managed emotionally and it's focused on making awesome product rather than public BS and financial stunts.
Apple would NEVER buy a Motorola.
Let me repeat.
If Apple had bought motorolla, everyone here would be declaring what a genius move it was.
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I'm getting kind of tired of people saying Apple has $76 billion in cash. They don't, look at the 10Q if you don't believe me.
I'm getting kind of tired of people saying Apple has $76 billion in cash. They don't, look at the 10Q if you don't believe me.
IMO all the posters bar BC2009 have missed the point of this acquisition...
Its for a combo of patents and for having a handset maker, as a previous post on the frontpage talked about how Apple is able to own the tablet market due to them writing the software for specific setups (aswell as paying upfront for large amounts of components), i.e. the iPhone 4, the iPad 2 etc... despite the iPad or iPad 2 having a lower spec, it works so well because the software has been tailored around this...
I think the top dogs at Google have seen the light in the way Apple does business and have seen that it is a good way to turn a large profit... so if they continue with Android in the current position but at the same time write a specific version of Android tailored around hardware they decide and control then it will create an additional revenue stream which could be profitable quickly, that way they can continue to learn and evolve Android through their partners, Samsung et al, and at the same time create a very good user experience on their own handsets, that is if they can actually get Motorola to produce some decent phones as lets be honest Motorola handets have sucked for a VERY long time....
Right. Because every patent is worth exactly the same amount of money, and so what's important is how many you have...
Yes, sarcasm
Motorola are old-hat. They don't have the sort of patents that will protect Google from Oracle's Java claims, and they don't have the sort of patents that will protect Google (or their partners, anyway) from Apple's UI and touch claims.
One assumes that anything to do with the fundamentals is already licensed.
I'm more inclined to believe that Google purchased Motorola Mobility because a) it was very blatantly for sale and had been for some time and b) Microsoft and other parties were said to be interested, than because Google had any specific strategy or pre-conceived plan for acquiring Motorola Mobility and its patents.
The best outcome Google can hope for, IMHO, is to shape MMI up into a mean, lean Android handset manufacturer and sell it on in several years time, keeping any IP that they perceive to be of value.
Value is only perceived
The big point that many people seem to be missing is that value is entirely perceived, and not about physical attributes at all. Therefore you can't say that this puts a value of X on each patent plus X for every handset they produce or anything.
If you're looking to buy a house when nobody else is, you'll get a cheap house. If many other people are in the market you will pay more for the same house. This doesn't mean the actual value of the house has changed; it doesn't change how much it cost to build it or the cost of the fittings, however it does change the perceived value, and hence the highest bidder will win. Lower bidders will think the winner overpaid, and outsiders who would have paid more if they were looking for a house may think they got a good deal.
Essentially what I'm getting at is that it's a matter of opinion, not fact.
Many people are saying that they overpaid because of the 63% premium over their share price. What if Google announced they were planning on buying Motorola stock, waited until the public trading price went up then made the purchase? Would that have made it a better deal? Obviously not.
Valuing companies is an entirely abstract thing; not really based on numbers except at the very basic level. Every acquisition comes with risk and the only insight you can have to say whether is was a good or bad deal is hindsight.
The big point that many people seem to be missing is that value is entirely perceived, and not about physical attributes at all. Therefore you can't say that this puts a value of X on each patent plus X for every handset they produce or anything.
If you're looking to buy a house when nobody else is, you'll get a cheap house. If many other people are in the market you will pay more for the same house. This doesn't mean the actual value of the house has changed; it doesn't change how much it cost to build it or the cost of the fittings, however it does change the perceived value, and hence the highest bidder will win. Lower bidders will think the winner overpaid, and outsiders who would have paid more if they were looking for a house may think they got a good deal.
Essentially what I'm getting at is that it's a matter of opinion, not fact.
Many people are saying that they overpaid because of the 63% premium over their share price. What if Google announced they were planning on buying Motorola stock, waited until the public trading price went up then made the purchase? Would that have made it a better deal? Obviously not.
Valuing companies is an entirely abstract thing; not really based on numbers except at the very basic level. Every acquisition comes with risk and the only insight you can have to say whether is was a good or bad deal is hindsight.
Motorola is the originator of a lot of things, from cell phones, to settops, to broadband infrastructure.
Perhaps their patents won't apply to the Java dispute, but they'll surely apply to power, radio and antenna technology.
More recently, Motorola was the first LTE equipment maker to accomplish an EVDO to LTE (and back) handoff on the fly, while streaming data and video on the move.
Which type of patent is worth more? Communications or UI?
If Apple wins its patent battles, Android makers might have to give up UI frills like slide to unlock and bounce back at edges. If Motorola wins, Apple might have to pay more for, or even change, phone basics like 3G and WiFi.
That's simply not possible with thousands of patents, unless Apple had made a broad agreement with Motorola before. Their lawsuits show that no such deal exists.
All that said, it's a pity that so much money and effort is going into this patent arms race, which only the lawyers will win, while consumers will pay more and companies get distracted. I'm trying to think of something good that might come out of all the court cases, but I can't yet.
In case you didn't notice, I was not criticizing the purchase, but the title of the article ("...Reacts...").
I don't care why Google made the purchase.