There are several aspects of the recent Nortel Networks patent portfolio auction that have raised brows across the industry.
First, the stalking horse tactics of Google, which in itself established how vital the portfolio was to the telecommunications industry. The Smartphone market, while past maturity in the developed world, has only started to realize its potential in the emerging economies.
Second, it was Google’s naiveté, or its sense of humor (depending on whether your glass is half full), in its bid amounts. With the stalking horse bid of $900 million, Google wasn’t so far wrong with tripling the bid to $3.14 (pi) billion. Google has much to gain by establishing a comfortable eco-system for Android to flourish and the Nortel portfolio could only but help. And if you’re spending that kind of cash, you might as well treat the media with the fodder and feel satisfied that you made nerd the new sexy.
Yes it could have earned Google some very cool points, only if Apple and Microsoft hadn’t realized it even better than Google. Surprisingly the Lexus and the Ford of computing decided to put aside their differences and outbid Google together with a whopping $4.5 billion ‘Rockstar’ bid.
Third, of course, Google’s own reaction to losing the auction. The initial knee jerk reaction Google’s executives gave was as expected: sulking. However, as the industry started to fully comprehend what the deal would mean to the Smartphone market (and especially the Android) in the next five years, Google has seemingly decided to go on the offensive.
In early August, Google rallied public attention to the unfair advantage Nortel’s patent portfolio gives to Microsoft and Apple. Google SVP and Chief Legal Officer David Drummond even added that the U.S. Department of Justice is already investigating how the Nortel Networks deal upsets the Smartphone landscape.
Keeping aside the omnipresence of Google itself in each of our daily lives, one can begin to see the merit of this argument. The consortium which won the Nortel portfolio comprises of Microsoft, Apple and Research in Motion, which hold a majority share in the Smartphone market, even though the individual share of each is currently below Android’s slice. But Android’s 40% share of the market is divided among players such as Samsung, Motorola, LG and Dell.
The intellectual property landscape is even further skewed, with Microsoft and Apple together accounting for well over half of all patents related to Smartphone operating systems, audio and digital signal processing. The empty spaces in Microsoft and Apple’s portfolio, most notably related to telecommunication infrastructure, will aptly be filled in with the Nortel patents; leaving Google and its partners Samsung and Motorola with dominance over semiconductors and smartphone hardware. A dominance which notably may no longer provide leverage as Android Smartphone manufacturers like Samsung and Motorola are already the leading suppliers for Apple and Microsoft.
Knowing the disadvantage the Nortel deal poses to Android, Google will surely try to unionize the Android players further. Its $12.5 billion surprise acquisition of Motorola Mobility only confirms this. And from as early as April 2011, Google has been pitching in on patent lawsuits against Motorola and Samsung. And even though most of these actions did no legal good (case in point: link) they have definitely solidified the Android community.
And then Google dropped its biggest bomb. A whole $12.5 billion worth. Larry Page hit the nail right on the spot when he said this about the Motorola Mobility acquisition:
“We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android… Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.”
The Motorola Mobility deal is not just about the patent portfolio. Motorola continues to be a key player in the smartphone and tablet arena. But the fact that Larry Page went out to mention the IP advantage it provides, speaks volumes on how serious Google is on protecting Android.
And whether you like Google’s antics or not, with Motorola Mobility in the bag, Google just proved Android is more than just a business.
Disclaimer: Views expressed are entirely personal and do not constitute legal advice.
(Featured image source: https://pixabay.com/p-1885861/?no_redirect)