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The official statement from Google says,

Google Inc. (NASDAQ:GOOG - News) and Motorola Mobility Holdings, Inc. (NYSE:MMI - News) today announced that they have entered into a definitive agreement under which Google will acquire Motorola Mobility for $40.00 per share in cash, or a total of about $12.5 billion, a premium of 63% to the closing price of Motorola Mobility shares on Friday, August 12, 2011. The transaction was unanimously approved by the boards of directors of both companies.

The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

Meanwhile, over in the Google Blog, Larry Page explains,

Since its launch in November 2007, Android has not only dramatically increased consumer choice but also improved the entire mobile experience for users. Today, more than 150 million Android devices have been activated worldwide—with over 550,000 devices now lit up every day—through a network of about 39 manufacturers and 231 carriers in 123 countries. Given Android’s phenomenal success, we are always looking for new ways to supercharge the Android ecosystem. That is why I am so excited today to announce that we have agreed to acquire Motorola.

Motorola has a history of over 80 years of innovation in communications technology and products, and in the development of intellectual property, which have helped drive the remarkable revolution in mobile computing we are all enjoying today. Its many industry milestones include the introduction of the world’s first portable cell phone nearly 30 years ago, and the StarTAC—the smallest and lightest phone on earth at time of launch. In 2007, Motorola was a founding member of the Open Handset Alliance that worked to make Android the first truly open and comprehensive platform for mobile devices. I have loved my Motorola phones from the StarTAC era up to the current DROIDs.

The bold-faces are mine.

First, note how Larry says Google is acquiring Motorola, rather than Motorola Mobility. That’s because mobility is the heart and soul of Motorola, Inc., which has been synonymous with mobile radio since the company was founded by Paul Galvin in 1928. Motorola, Inc.’s other division, Motorola Solutions, is big and blah, selling gear and services to business and government. Now that Motorola Solutions will be 100% of Motorola, Inc., it’s an open question where the Motorola name will go. Since Larry says Google bought Motorola, I’m guessing that the acquisition included the name. Nothing was said about it in either the release or the blog post, but it’s bound to be an issue. I hope somebody’s bringing it up in the shareholder webcast going on right now (starting 8:30 Eastern). If Google got the Motorola name, Motorola solutions will probably go the way of Accenture, which used to be Andersen Consulting.

At the very least, this is patent play. That’s why Larry talked about intellectual property. In mobile, Motorola (I’m guessing, but I’m sure I’m right) has a bigger patent portfolio than anybody else, going back to the dawn of the whole category. Oracle started a patent war a year ago by suing Google, and Google looked a bit weak in that first battle. So now, in buying Motorola, Google is building the biggest patent fort that it can. In that area alone, Google now holds more cards than anybody, especially its arch-rival, Apple.

Until now, Apple actually wasn’t a direct enemy of Google’s, since Google wasn’t in the hardware business. In fact, Android itself was hardly a business at all — just a way to open up the mostly-closed mobile phone business. But now Google is one of the biggest players in mobile hardware. The game changes.

For Google’s Android partners other than Motorola, this has to hurt. (Henry Blodget calls it a “stab in the back.”)

For Windows Mobile, it’s a huge win, because Microsoft is now the only major mobile operating systems supplier that doesn’t also own a hardware company.

Unless, of course, Microsoft buys Nokia.

[Later...]

The conference call with shareholders is now over, and the strategy is now clear. From Business Insider’s notes:

David Drummond, Google’s legal chief: Android under threat from some companies, while I’m not prepped to talk strategies, combining with Motorola and having that portfolio to protect the ecosystem is a good thing.

Sanjay Jha: Over 17,000 issued, over 7,500 applications out there. Much better support to the businesses.

8:47: Android partners, a risk to them?

Andy Rubin: I spoke yesterday to top 5 licensees, all showed enthusiastic support. Android was born as an open system, doesn’t make sense to be a single OEM.

8:48: What convinced you this was optimal solution? Competencies that aren’t core to Google?

Larry Page: I’m excited about this deal, while competencies that aren’t core to us, we plan to operate as a separate business, excited about protecting the Android ecosystem.

Always watch the verbs. “Protecting” is the operative one here.

Eric S. Raymond weighs in, optimistic as ever about Google/Android’s position here:

We’ll see a lot of silly talk about Google getting direct into the handset business while the dust settles, but make no mistake: this purchase is all about Motorola’s patent portfolio. This is Google telling Apple and Microsoft and Oracle “You want to play silly-buggers with junk patents? Bring it on; we’ll countersue you into oblivion.”

Yes, $12 billion is a lot to pay for that privilege. But, unlike the $4.5 billion an Apple/Microsoft-led consortium payed for the Nortel patents not too long ago, that $12 billion buys a lot of other tangible assets that Google can sell off. It wouldn’t surprise me if Google’s expenditure on the deal actually nets out to less – and Motorola’s patents will be much heavier artillery than Nortel’s. Motorola, after all, was making smartphone precursors like the StarTac well before the Danger hiptop or the iPhone; it will have blocking patents.

I don’t think Google is going to get into the handset business in any serious way. It’s not a kind of business they know how to run, and why piss off all their partners in the Android army? Much more likely is that the hardware end of the company will be flogged to the Chinese or Germans and Google will absorb the software engineers. Likely Google’s partners have already been briefed in on this plan, which is why Google is publishing happy-face quotes about the deal from the CEOs of HTC, LG, and Sony Ericsson.

The biggest loser, of course, is Apple; it’s going to have to settle for an armed truce in the IP wars now. This is also a bad hit for Microsoft, which is going to have to fold up the extortion racket that’s been collecting more fees on HTC Android phones than the company makes on WP7. This deal actually drops a nuke on the whole tangle of smartphone-patent lawsuits; expect to see a lot of them softly and silently vanish away before the acquisition even closes.

I don’t think anybody has paid more attention to this whole thing than Eric has, and he brings the perspective of a veteran developer and open source operative as well. (Without Eric, we wouldn’t be talking about open source today.)

On August 17, Holman Jenkins in the Wall Street Journal added this bit of important analysis:

Android has been hugely advantageous for everyone who is a successful phone maker not named Apple. Remember, Apple’s premium smartphone holds up the pricing structure for the whole industry. Samsung, HTC and the rest have been selling phones into this market and pocketing huge margins because they pay nothing for Android.

Google wouldn’t be human if it didn’t want some of this loot, which buying Motorola would enable it to grab. But that doesn’t mean, in the long term or the short term, that other hardware makers will walk away from a relationship that has lined their pockets and propelled them to the top of the rapidly growing and giant new business of making smartphones. Let’s just say that while having Google as a competitor is not ideal, handset makers will learn to live with it.

Jenkins’ columns often rub me the wrong way, but this bit seems spot-on.

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Tomorrow we fly to Paris, where I’ll be based for the next five weeks. To help myself prep, here are a few of my notes from conversations with friends and my own inadequate research…

Mobile phone SIM recommendations are especially welcome. We plan to cripple our U.S. iPhones for the obvious reasons AT&T details here. Our other phones include…

  • Android Nexus One (right out of the box)
  • Nokia E72 (it’s a Symbian phone)
  • Nokia N900 (a computing device that does have a SIM slot and can be used as a phone)
  • Nokia 6820b (an old Nokia candybar-shaped GSM phone that hasn’t been used in years, but works)

Ideally we would like to go to a mobile phone store that can help us equip some combination of these things, for the time we’re there. The iPad too, once it arrives. It will be a 3G model.

Au revoir…

[Later...] We’re here, still jet-lagged and settling in. Here are some other items we could use some advice on:

  • “Free” wi-fi. This is confusing. There seem to be lots of open wi-fi access points in Paris, but all require logins and passwords. Our French is still weak at best, so that’s a bit of a problem too. One of the services is called Free, which also happens to be the company that provides TV/Internet/Phone service in the apartment. Should this also give us leverage with the Free wi-fi out there? Not sure. (Internet speed is 16.7Mbps down and .78Mbps up. It’s good enough, but not encouraging for posting photos. I’m also worried about data usage caps. Guidance on that is welcome too.)
  • Our 200-watt heavy-duty 220/110 step-down power transformer crapped out within two hours after being plugged in. We want to get a new one that won’t fail. The dead one is a Tacima.

Again, thanks for all your help.

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