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bcatanzaro

"It’s still early days for Google’s hardware business."

Why no mention of Motorola in 2011? Google bought it for $12.5B, and sold it 2014 for $3B.

I think it would have made the blog post better to give some explanation for why Things Are Different This Time.

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The way this worked out was that Google spent $12.5B, but they got:

Cash: $3B

Tax Credits: $1B

Sale of Motorola Home: $2.4B

Sale of Motorola Mobility: $2.9B

---------------------------------

Total: $9.3B

So Google ended up paying about $3.2B for Motorola's patent portfolio, which was valued at $5.5B.

https://dealbook.nytimes.com/2014/01/29/did-google-really-lo...

you can make the math look okay as long as you ignore the $200-500M per quarter in losses that google swallowed for the 2.5 years that they owned motorola.

Which would make the deal about break even, depending on whether that was more like $1B or $2B lost each year.

It's almost as if the people running Google are not idiots.

That's a stupid thing to say. People running large companies can be idiots. Look at Microsoft's Nokia deal.

There’s a difference between being an idiot and losing a bet, right?

Yes, but everyone thought it was mad at the time.

I wouldn't say that everyone thought that. I frequently said things about the foolishness of that bet only to be shouted down on internet forums.

Steve Ballmer strikes me as an idiot.

He doesn't run google.

Gates thought he was sharp. Do you think Gates can't tell the difference?

At the same time, what was the alternative? If you wanted Motorola type patents... you can't just buy them off a shelf.

There's a limited supply, and only some of them are ever for sale.

Quite so, and the cost of Moto also does not include the management distraction of doubling headcount and diluting company culture during the period where Google owned Moto.

You can look at the HTC deal as the learnings from the Moto deal: Buy only what you need, spend no time, money, or attention on things you will need to get rid of.

From business perspective, people should also calculate cost allocation to opportunity winning market and risk being sued by competitor

Google bought Motorola patents that came with hardware businesses attached for defense purposes, not because they wanted in on the hardware business. This was after they found themselves unarmed during a thermonuclear patent war.

Google dropped the hardware businesses and kept the patents. The patent market was notably frothy at the time, and conventional wisdom then valued Motorola's patent chest at $4.0-4.5 billion (Apple + MS consortium bought the comparable Nortel trove for a price in that ballpark). If that value is correct, then Google made a profit on buying and selling Motorola (patents + Moto Home + Moto Mobile).

> not because they wanted in on the hardware business

I don't think that's true, see Project Ara [0]

[0] https://en.wikipedia.org/wiki/Project_Ara

I'm sure the hardware was a bonus but at the time the purchase was primarily driven by the patents. Apple, Microsoft, Oracle , Cisco, and all the other big players have shed loads of patents for just about everything and uses them as counter measures against any potential litigation. Google at the time was lacking in such patents and was vulnerable. Motorola presented an opportunity with it's extensive cache of patents to level the playing field.

Google also kept the experimental team (I don't remember its name) from Moto.

Typical forced intention after fact.

To say Google not interested in hardware when they purchased Motorola is plain baseless.

It's not really 'after the fact' if that's been the popular opinion since before the deal in 2011 though

That is what all the coverage at the time pointed out.

They missed out on the Nortel patent portfolio earlier that year I think.

Coverage at the time, and since, in the apple-centric web focused on how Google tried to compete in hardware with Apple and failed and how they "lost" billions on the deal.

So that may be where this confusion arises.

From the blog post announcing they bought Motorola:

> We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.

https://googleblog.blogspot.de/2011/08/supercharging-android...

Another point to consider is that Motorola has become a very healthy and popular phone brand. Especially with their inexpensive stock Android phones. Google must benefit from this as well.

but it's owned by Lenovo now, so Google is not profiting from that? Or is that not what you mean?

You can benefit from it without profiting directly. I think Google benefits from Android adoption as a whole since that usually means adoption of Google services

Some user here (seems I'm not able to find him/her) on HN mentioned that they also feared that Samsung would be switching to their own thing, dropping Android and that may have been a factor in their decision to sell Motorola as they really want to keep everyone in the Android boat.

Made sense to me, at least.

Good phones running almost stock Android are useful from a marketing PoV for both positive (as a showcase for the OS) and negative (good devices that aren't running iOS/Windows/other) reasons.

Their adoption helps increase the market share of the OS so makes creating content for them (apps in the Play store, and so forth) more attractive again indirectly helping because all Android devices potentially benefit from that.

So not a profit in any easily measured $ terms, but definitely a benefit.

So two things. The title is LITERALLY: "Google signs agreement with HTC, continuing our big bet on hardware" - notice the continuing. The guy writing the blog post came from Motorola... so I don't think he's trying to hide it.

As others have mentioned, Motorola was 90% about the patents because they were fighting trench warfare with Apple AND Microsoft at the time. And 10% about having some say over a premium phone that wasn't full of garbage overlays. They were at war with Samsung over Touchwiz and Tizen at the time. So ya... it was 100% a strategic move, and exactly why the bailed as soon as humanly possible.

> I think it would have made the blog post better to give some explanation for why Things Are Different This Time.

When they bought Motorola it was for patents, they absorbed the patents but kept the remainder of the business separate from Google. Eventually breaking it apart and selling it off.

This announcement doesn't sound like they are acquiring then entirety of HTC but rather a team within HTC. And that the team is joining Google, not remaining a separate entity.

So things are different because they're acquiring a part of HTC and folding it into their organization for the explicit purpose of furthering their hardware pursuits. Not just buying up the whole company for it's patents and selling off the remainder.

They also sold Motorola Home for $2.35B.

https://www.wired.com/2014/01/google-moto/

All this explanation is great - as I said it would have improved the blog post to include some of that. I'm not arguing that it's not actually different this time. But I think they should have made the case in the blog post.

It might have improved understanding of some historical tidbits at the cost of distracting from today's story. Corporate blogs are still PR venues first and foremost, aimed at investors and the media.

Investors already know how the moto deal turned out (or are willing to look into it themselves to check the numbers). The media needs soundbites.

From my understanding that was specifically for the gigantic patent portfolio and little interest in the hardware. Hence the immediate spinoff.

Was that not a patent grab? I always thought that was the main premise.

I think they are referring to Google's hardware business as in the internal hardware unit within Google. While it's true that Google bought Motorola, Motorola employees didn't become Google employees as far as I know?

In this case though I think the HTC division will operate within Google as opposed to a separate entity like Motorola remained.

It's a blog post from google.com, expect it to be biased.

Don't forget Microsoft and Nokia! The only explanation is patents.

Is it? Nokia (yes, the company still exists, it has just left the consumer market) kept quite many patents and I think there licensing is profitable (I don't remember the exact conditions) For which phones Microsoft would have needed patents? They had no phones before they bought Nokia.

The Nokia deal was botched/didn’t make sense even with patents.

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