Nilay Patel of The Verge has some questions about Google’s $12.5 billion acquisition of Motorola. Specifically, why?
The biggest problem is that Motorola’s patent portfolio doesn’t appear to be worth anything close to what either company assumed: the judge in the Microsoft v. Motorola patent case ruled yesterday that Redmond owes a paltry $1.7 million in annual royalties for using Motorola’s standards-related Wi-Fi and video-encoding patents in every Xbox 360 and Windows 7 PC sold, rather than the $4 billion Motorola had originally demanded.
To put that in perspective, it would take 3,235 years for Microsoft’s royalties to pay off Google’s $5.5 billion valuation of Motorola’s patent portfolio.
It’s possible Google really believed that those patents were a diamond mine, and not a couple of rusty boxcars full of cubic zirconia.
Anyway, that makes the Google superphone more important than ever. As I said at the time, “This was never about the Motorola patents.”
At some point, this investment has to begin paying off or get written down.