Patent power (part 2) – Google buys Motorola Mobility

Today’s big news is Google’s acquisition of Motorola Mobility. What is fascinating is the logic for the deal. This is not a deal driven by customers or operating synergies – it is all about Motorola’s patents.

The give-away is the final paragraph of Google’s announcement:

“We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. 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.” – Google

Having failed to acquire Nortel’s patents, this move is all about positioning Google for a series of multi-jurisdictional patent claims and counter-claims coupled with positioning for cross-licensing deals.

It remains to be seen what impact this will have on other parts of the mobile eco-system, but it may heralds the start of the more aggressive use of patents by technology companies – by way of example see Apple’s recent successful blocking of the launch of the Samsung Galaxy Tab in Europe as a result of a German court injunction.

RIM and Google compete to acquire Nortel’s patents

Readers with long memories will remember Nortel’s glory days of the 1990s, when it expanded rapidly by supplying equipment on the back of significant investment in competitive telecoms networks unleashed by the first wave of telecoms market liberalisation. It was badly hit by the dot.com crash, but managed to struggle through the noughties before filing for creditor protection in January 2009. Whilst the global financial crisis may have been the proximate cause of its filing, for Nortel the crisis had started much earlier.

Whilst Nortel’s glory days are in the past, there remains enduring value in its patents. The reason is the commercial power of patents: a patent grants the holder the right to exclude all others from using the patented invention, giving them a exclusive monopoly for the life-time of the patent (typically 20 years). This monopoly can be exploited in a number of ways: worked by the patent holder, enforced to keep others off the market, exclusively licensed, non-exclusively licensed or cross-licensed with others to get access to their technologies.

The last strategy (that of cross-licensing) in the perhaps the most interesting as patents are increasingly being used as strategic weapons by the largest global players – often the response to a patent action will not merely be defence of the action, but the launch of other actions relation to other patents or in other territories as a prelude to settlement and cross-licensing deals.

It’s this strategic power that explains Google’s $900m initial bid and unconfirmed reports yesterday that RIM has also entered the bidding for Nortel’s remaining 6,000 patents.

Meanwhile, in order to try to encourage patents to be held in the UK, the recent budget announced that the UK would continue to press ahead with implementing its ‘patent box’ tax incentive scheme.

Microsoft to rescue Nokia?

“There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform”, and he needed to make a choice.” (allegedly) Stephen Elop, CEO Nokia. 

When an internal memo from the new CEO of Nokia was leaked earlier this week it was clear that he was not a man happy to steer Nokia on a ‘steady as she goes’ course.  Instead, he liken Nokia to a burning oil-rig with three major fires – Apple at the top-end, Android in the middle and low-cost  OEMs at the bottom.

This morning’s announcement of Nokia’s switch to Windows Phone as its principle smartphone platform is a dramatic shift in strategy for Nokia as it abandons the Symbian platform. Nokia has also restructured and reorganised its management team.

For Microsoft, whose mobile platform has quietly been winning plaudits, but has struggled to get volume distribution, this seems like a great opportunity, whereas for Nokia this represents a leap off the burning platform into icy waters. It remains to be seen what Nokia looks like when it surfaces.

Do more tablets mean more ‘lean-back’ consumer browsing?

Sadly I’ve not been in Las Vegas at CES, but remained at my desk in London reading the various updates.  As the dust starts to settle it seems that tablets are the story of this year’s show.  Not having had the opportunity to personally play with any shiny new toys, I am not in a position to advise readers on whether they should stick with their iPads (works for me) or rush out to buy a Motorola Xoom, Blackberry Playbook, Dell Streak or any one of a large number of new tablets.  Nor am I able to comment on the merits of the various operating systems – Apple, Android, Blackberry or Windows.

However, stepping back from the technology I wondered if this sudden upsurge in tablet offerings, as well as been driven by suppliers wanting a slice of the new category created by the iPad, also heralds a shift in consumer behaviour?  If so, what does that mean for the wider industry?

Shifting markets, one perceived barrier to the take up of streamed IPTV has been the difference between consumer ‘lean-back’ and ‘lean-forward’ behaviour.  Crudely summarised, ‘lean-back’ behaviour is sitting back on the sofa and passively viewing TV, whereas ‘lean-forward’ behaviour is using a PC in an interactive way for social media, web-browsing, email, etc.  The barrier of consumers not (in large numbers) wanting to consume TV as ‘lean-forward’ content, has been one driver behind the creation of ‘over-the-top’ IPTV platforms which deliver streamed video content to TV screens – iPlayer, YouView, Hulu and NetFlicks

The rise of the tablet could be part of a behavioural shift whereby activities which would previously have been ‘lean-forward’, sitting at a PC activities, and instead undertaken in ‘lean-back’ mode.  On a personal level, I have found, post-iPad, that I now spend much  more time connected on my sofa, rather than at my home desk.  If this is right, and the trend is more general, then this could be bad news for desktop PC / laptop PC hardware and software vendors, but good news for TV and console manufacturers as the focus of consumers’ connected world shifts from the home desk to the sofa.