Google's Patent Indigestion

$12.5 Billion for a company with a portfolio of 17,000 patents is major news. This news comes on the heels of Google being 0-for-3 in playing big strategic patent squamish, bypassing opportunities for other portfolios such as Palm, Sun (whose Java and MySQL technologies went to Oracle), and the recent Nortel transfer.

Having Motorola in the wings explains a bit why Google’s bids for the Nortel portfolio had an element of inside whimsy. A bid of $3.1459 Billion was recognized as the mathematical constant Pi - known in mathematics as an 'irrational number' providing a pun and double-entendre to the bidders if they recognized it as such. However the Nortel auction did set a market price.

Google is paying about $736K per patent. The Nortel deal was $4.5 Billion for 6,000 patents - $750K per patent. Perhaps there is some relation to these per-patent rates if one is acquiring real competitive blocks of an industry.

This won’t be the end of the story. Google and Motorola are vastly different culturally. This isn’t like buying or funding a startup in Santa Clara. Digesting the company will be more difficult than digesting the vast portfolio. Determining who is already licensed to what portions of the Motorola portfolio is another huge effort.

Larry, Sergei: call me for the Tums.

(See, An Insider On The Nortel Patent Auction And Its Consequences and
Google to buy Motorola; patents key to deal).

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