Google has shuffled the deck again. After announcing the purchase of smart home thermostat maker Nest for US$3.2 billion recently, Google has now signed an agreement to unload its unsuccessful foray into mobile phone making by selling handset maker Motorola for US$2.9 billion to Chinese PC maker Lenovo.
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When Google purchased Motorola not even two years ago they paid US$12.5 billion for it. At the time it was thought its huge patent collection would be an asset in the intellectual property wars going on in the mobile telephony space with Microsoft, Apple, Samsung, Nokia, HTC, Ericsson et al.
It was also considered at the time as potentially a smart defensive tactic for the Android system against the Rock Star consortium, that had acquired a big chunk of the defunct Canadian company Northern Telecom’s patent portfolio. Google had also bid billions for the same portfolio but lost the bid. As a defensive IP shield however, the acquisition of Motorola must be regarded as having been completely unsuccessful. So far Motorola has not won a single siognificant judgment against any of its competitors in the intervening period.
Bailing out of a strategic mistake takes time, however. Google did get some of their money back when they sold part of Motorola off, Motorola’s home set top box division for US$2.3 billion in 2012. The company also had US$2.9 billion in cash too when they bought it, though it is not clear how much money Motorola has burned through since while they have owned it. Google gets to keep the 15, 000 patents as well, licensing some of them to Lenovo to the extent Lenovo needs them.
In any case it is new lamps for old now for Google. US$2.9 billion comes in from Lenovo, US$3.2 billion is going out the door for the purchase of Nest, almost a break even on cash for the swap one could say therefore. For Google the Motorola chapter is over and they will now just move on in their main businesses, promoting search and continuing to proselytize for Android.
As long as these continue to bring in the advertising dollars their shareholders, and Larry Page, won’t mind the occasional hiccup such as ownership of Motorola has undoubtedly been.