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Google investors might find the mixed messages about Moto's patents slightly bothersome

Here is an excerpt from an interview that the New York Times conducted with Google’s director of business development for Android John Lagerling last week about the launch of the Nexus 4 phone and Nexus 7 and Nexus 10 tablets:

Q. So how does Google take advantage of the Motorola acquisition?

A. The way I understand it is, it’s mostly about the patents, the way you can sort of disarm this huge attack against Android. We talked about prices. There are players in the industry who were unhappy about more competitive pricing for the consumers. They want to keep the prices high, they want to force the price to be so high that operators have to subsidize the devices very highly. That’s not only the Cupertino guys but also for the guys up in Seattle. They want higher margins, they want to charge more for software.

We simply believe there’s a better way of doing it without extracting that much payment from end users, because there are other ways to drive revenues. Patents were used as a weapon to try to stop that evolution and scare people away from lower-cost alternatives. And I think with the Motorola acquisition we’ve shown we’re able to put skin in the game and push back.

Back in June Google executive chairman Eric Schmidt told shareholders that the Motorola purchase was about “the sum of patents, products, the people, and the innovation”, but perhaps Lagerling’s statement indicates that this message has not percolated down to the rest of the company’s senior management. It’s worth remembering that Google actually valued the patents in the deal at $5.5 billion, leaving $7 billion to be accounted for by other stuff. It’s also worth remembering that documents published soon after the deal was announced revealed that the Moto board struck a very hard bargain, while Google had a very limited time to do its due diligence on what it was buying.

If I were a Google investor I might find it slightly disconcerting that different decision makers in the business see the Moto deal in different ways. That suggests a level of confusion about what the drivers were for the acquisition. It’s hard to imagine similar mixed messages coming out of Microsoft or Apple.

Joff Wild
IAM Magazine
04 November 2012

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Patents, IP business, IP valuation


RE: Google investors might find the mixed messages about Moto's patents slightly bothersome

Steve Jobs clearly thought small format tablets were pants. Google then releases first generation Nexus 7. Apple now thinks small format is cool!

He said "mostly" about the patents. Patents are not the only IP. This baby is going to cause Apple some grief. http://www.razri.com/uk/ and this baby http://www.google.com/nexus/4/........which is less than half the cost of the iPhone 5. The Nexus 7 is cool no question.

We have Apple getting smacked down by the UK courts and significant additional reputation damage in the UK today due to their tax avoidance practices. News on the street is that the iPad mini has been the slowest Apple product launch for years. If I was an Apple investor I would bail and join those smart guys at Google.

Apple is running out of ideas. Google has just started. What we may see in the not too distant future is that the vast majority of the value in Apple and Google has virtually nothing to do with their patents.

Nicholas White, Tangible IP on 04 Nov 2012 @ 20:21

RE: Google investors might find the mixed messages about Moto's patents slightly bothersome

I'm not surprised that different senior executives have different views. As I pointed out at the IPBC last summer, intellectual capital/intangible assets are like the elephant surrounded by blind men. Each one knows only the part they can feel - not the whole. Hopefully for Google Schmidt sees the whole.

Kenan Jarboe, Athena Alliance on 05 Nov 2012 @ 14:11

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