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8/24/2011
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Motorola, Google Deal Highlights Patent System Mess

The only people winning today are the attorneys; the rest of us merely see technology product delays, product doubts, and higher prices.

I'd say just about everyone was surprised by the recent news that Google is buying Motorola Mobility for a whopping $12.5 billion. And, at first glance, such a move makes no sense whatsoever. I mean, Google is an advertising company using an operating system to build the database of marks, err, I mean, potential customers, which it can sell to its partners, um, I mean, customers. It therefore makes sense to get Android onto as many handsets as possible, across as many vendors and brands as possible, and Google has indeed been very, very successful at doing that, reaching #1 in platforms.

So, then, why would Google put that sinking feeling into the hearts and minds of handset manufacturers everywhere by setting up a classic case of channel conflict? As in, Google will sell Motorola-branded handsets that everyone knows are really Google handsets. As Google will have a huge, shareholder-influencing financial stake in Motorola, they'd of course want to do something special with their products, and, competition being what it is, possibly to the detriment of Motorola's competitors, many of whom are, um, Google's partners dependent upon Android. If I were an OEM using Android today, I'd be worried, playing what-if but not yet jumping to another OS. S&P (yes, that S&P, but their reasoning is once again sound here) downgraded Google's stock to a sell based on this and other doubt-filled news about the company's prospects.

But wait, there's more--much more in fact. It seems Google is buying Motorola not really for the handset business, but rather for the firm's extensive patent portfolio. It seems Google needs a much larger position in IP (intellectual property) in order to fend off attacks from competitors like Microsoft and Apple. While patents aren't always useful in stopping the competition dead in their tracks (indeed, only seldom is such the case), alleging infringement on patents can slow a competitor markedly, often long enough to gain significant marketplace advantage. You see, competition today isn't really about who's got the best handset, the best OS, the best support, price, carrying case, or some other element that might please a real customer. No, it's really about competition in the legal domain, strategically wielding patents like a mace.

I've argued for some time that the whole patent process is out of control. Many patents shouldn't be issued at all--so-called business process patents, software patents, and all those patents where the overworked examiner was clearly bamboozled or just plain didn't get it. Many, myself included, have advocated that patents should be immediately disclosed when filed to allow sufficient time for review and comment, and to assemble as many opinions as possible to test the validity of what's being claimed. There's far too much litigation where such could be avoided; let's make sure issued patents really make a valuable contribution up front. The only constituency winning today are the attorneys; the rest of us merely see delays in products coming to market, doubt as to whether a given product will survive, and higher prices. After all, someone has to pay all those legal bills.

Yes, I do in fact know that the competitive market is all about beating the other guy. But the best way to do this is by providing the best products to end-user customers, optimizing for their success, and propelling the great wheel of economic progress in the bargain. The patent process as we know it today is in the way, and is now leading otherwise level-headed folk to take actions like those illustrated above. I'd also like to remind everyone that Google once before tried to sell their own Android handsets. I'm not sure they'll get a better result this time despite the venerable brand that, barring more drama, is soon to be all their own.

Craig Mathias is a Principal with Farpoint Group, a wireless and mobile advisory firm based in Ashland, Mass. Craig is an internationally recognized expert on wireless communications and mobile computing technologies. He is a well-known industry analyst and frequent speaker at industry conferences and trade shows.

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