Google to sell Motorola to Lenovo for $2.91B – FierceWireless

Google to sell Motorola to Lenovo for $2.91B – FierceWireless:

This is a pretty good take on the strategic transaction that Google has entered into with Lenovo.

The headlines will be very misleading related to the Motorola Wireless deal that Google just made for selling the handset division (hardware) to Lenovo. People will look at the almost $12.4B deal where Google bought some 17,000 and the Motorola wireless division that comes with it in May of 2012. and say that Google gooped up on this transaction. (Somewhat reminiscent of the Skype deals where Microsoft ended up with the technology at a small price compared to what eBay paid a few years earlier.)

This is a very smart deal by Google. Google is apparently keeping all of the software patents. The licensing (cross-licensing) agreements will probably give Google freedom to do whatever they want in the space. It takes them out of the hardware business, which made handset makers nervous (as an unfair competition with the bundle of handsets with Android OS).

When Google bought Motorola Mobility as a defensive maneuver. The problem is that Google’s “free” operating system and products tromp on thousands and thousands of patents (and copyrights). So they needed the patent portfolio to fight the patent war in computing and mobility. (Just as Microsoft needed the AOL patents.) Steve Jobs and Apple have been very irritated with Google giving away (their) technology; but it is a little more complicated to sue and make money from a product being sold for $0.00 per unit.

Even though Google gives many of its products way for “free”, it does make quite a lot of money, primarily from advertising. About 70% of Google’s stock value is attributable to its advertising (about half PC and half mobile). Google now is at a market cap of $380B bringing it up quickly onto size of the two largest market cap companies in the world Apple ($450B) and ExxonMobil ($411B) as of Jan 30 2014.

So now Google has the patent protection they had to have, and they have sold it too. Beautiful. Now they can move into the offensive position in the patent wars. This is a game of Risk, but with multiple dimensions like 3-level chess. There is what you see above the board, but what is below the board — where the patent portfolios live — is where the armies are being amassed.

Make no doubt, small players will be crushed. Blackberry and maybe even Nokia will likely be completely isolated. Orphaned.

This will give Samsung a little competition. Samsung dominates the cell phone market, especially among android phones. See add to Samsung Worries. Google can not afford to allow Samsung to get too big and too strong.

From Googles perspective, this is a work of motion art. Beautiful.

Other players, say Apple, may not appreciate the beauty of it so much.

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