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.

Microsoft buys Skype: comparison with eBay deal logic

The big story yesterday was the acquisition of Skype by Microsoft for $8.5 billion. It was only 6 years ago that eBay bought Skype for $ 2.6 billion. I thought it would be interesting to compare and contrast the publicly announced rationales for the deals.

First, here is Microsoft CEO Steve Ballmer yesterday:

“Skype is a phenomenal service that is loved by millions of people around the world. Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”

Back in 2005, Meg Whitman eBay CEO said:

“Communications is at the heart of ecommerce and community. By combining the two leading ecommerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net.”

Whilst eBay wanted to incorporate Skype into its core offering of online auction and payment platforms, the explicit Microsoft rationale is much more closely aligned to Skype’s existing business model – significantly reducing implementation risk.

Although not part of any official announcement, the six years since the eBay deal has seen the rise not only of Google, but also of social media (Facebook, twitter, et al). More recently open warfare has broken out in the mobile ecosystem with Apple’s iPhone and iPad redefining smartphone and tablet categories, and Google’s Android becoming the mass-market smart-phone platform, eclipsing Nokia’s market position in the prior generation of mobile handsets.

Microsoft’s recent deal with Nokia shows their intent in this arena and commentators have suggested that Skype is just another part of the broader struggle for market position going on between Microsoft, Google and Apple.

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.