This morning, Google announced that it was purchasing Motorola Mobility for $12.5 billion. Google’s largest purchase to date, Motorola brings a portfolio of leading Android devices and hardware legacy that stretches back almost a century. More importantly, Motorola owns in upwards of 12,500 patents and 7500 patent applications. There’s no question that this purchase has more to do with patent litigation than with creating great Android devices. Google essentially acknowledged this in their press conference this afternoon, calling the acquisition an opportunity “supercharge the Android ecosystem.” In other words, Google’s going to use Motorola’s patents to defend themselves and Android licensees against the barrage of attacks from Apple, Microsoft and Oracle.
So much will be written about the patents involved in the coming days. The most compelling aspect of this purchase is definitely how it affects phones and the swirling battle over patents and licensing connected to Android. Another question will be how Google will be effectively able to manage the difficult task of making hardware that competes with their licensees. In the meantime, there are some other interesting aspects of this deal that are likely to go overlooked in the crazed furor over mobile.
1. Motorola Mobility makes DVRs
Few people realize that in the Motorola, Inc split on Jan. 4 of this year, the division that spun off wasn’t just the mobile phone division. Motorola Mobility also includes the video solutions division that is responsible for making the DVRs that are in so many American households today. Most people don’t identify their DVR as a Motorola product because the logo of the cable manufacturer typically outshines the bare Motorola logo on the box. All the same, Motorola is one of the two leading manufacturers of the DVR boxes that cable companies use.
So why would Google care? Maybe nobody remembers, but Google tried to launch Google TV as a major platform in 2010 only to have content companies push back. Google has not exactly tried hard to inspire confidence in the platform, but most observers believe they will try to revamp the platform for a future push. The first products were the Logitech Revue and a Sony TV with Google TV built in. While the Revue was too expensive, the Sony had a chance of success before companies started to block Google TV from accessing their sites. The entire experience also suffered from feeling far too much like using a computer on your TV, something most consumers don’t want.
For Google TV to have success moving forward, it will have to find a way to be part of cable companies’ offerings. One way to move that forward would be to use the DVR box as a bargaining chip with cable companies. If Google can not only use Motorola’s TV expertise in the product, but try to find a less aggressive way to work with cable providers and ISPs, they may have a way to make Google TV more relevant.
One thing that may inhibit this from happening is Google’s insistence that they intend to run Motorola as a separate company while taking control of its patents. If they maintain that course, any use of Motorola’s DVR business won’t happen. Google may soon learn, however, that a company that is losing money is less useful than a company with assets that can be integrated.
2. Motorola holds patents that are part of the H.264 patent pool
The battle over Android and patents is not the only battle Google is fighting. Google is also heavily invested in a fight to try and make their own video standard, WebM, the standard video codec for HTML5 video. In 2010, Google announced that they had purchased the video codec VP8 and open-sourced it as WebM. Google’s intention was to usurp the position of H.264 as the industry standard for video encoding. By making it free and open source, Google’s hoped that open source browsers such as Firefox and Opera would adopt WebM as their plugin-free option for HTML5 video. Mobilified wrote about the issues surrounding WebM back in January
The problem is that H.264 has a long history in the industry and has always had titans behind it. Furthermore, large companies like Apple and Microsoft have always resisted using VP8-based code in their products for fear of patent litigation. Their stance has always been that it infringes upon existing patents and is too risky to use. H.264, on the other hand, has the backing of a number of licensees through the MPEG LA. As soon as Google announced WebM, the MPEG LA began gathering interest from their partners to take on WebM.
In July, MPEG LA appeared to have 12 companies on board to help establish WebM’s infringement of patents believed to be essential to the VP8 standard. MPEG LA would not release those companies names, but it was assumed that Motorola was on that list as they were a major contributor to the H.264 patent pool. It would appear, then, that you can strike Motorola from the list of companies willing to contribute to the lawsuit. While this may not matter in the long run for WebM’s future, it is certainly something that will have to be considered, since there is little doubt Motorola had effective video patents in addition to their phone patents.
Motorola has been around for a long, long time. It would be a shame if this deal only focused on patents and Android phones and didn’t involve using the various parts of Motorola’s business to deliver something interesting to consumers.