Comment by throwawaykf02 | Hacker News Reader

Comment by throwawaykf02 | Hacker News Reader

There was some credible speculation back then that Google bought up Mototorola because its CEO threatened patent warfare with other Android manufacturers, something Google really did not want happening.

Along similar lines, I speculate that Microsoft snapped up Nokia because they threatened starting an Android line of phones.

I think there's a significant business lesson in here somewhere... Something along the lines off "partner with a giant, then become dangerous to it"

Funnily enough, MS also gets a nice patent bonus along with its purchase as Google did with Motorola. However, I think Nokia's patent portfolio is much, much more powerful than Motorola's. This is for three reasons, two publicly evident and one anecdotal:

1) Apple admitted defeat in its patent fight with Nokia, something it hasn't done with anybody else;

2) Nokia has multiple patent lawsuits ongoing, and none of them involve standards essential patents, the one thing most likely to invoke the ire of the antitrust gods;

3) A previous boss of mine knew the head of Nokia R&D in America, and he regaled me with stories of smartphone apps they had working in their labs way back in 2006 that made me go "how the hell do they do that?" Unfortunately, any two-bit app developer can do those things today on any modern smartphone platform using publicly documented API. But I am still curious about what goodies they have hidden away in their labs today.

This is largely OT, but I consider this to be a critical factor in online communities, so...

    I speculate that

I upvoted you just for this bit. Smart people who note when they're speculating are rare ##. I hear speculation spoken as though it were experience or authority depressingly often.

Reading your comment further: I agree.

## I'm worried that I'm sounding prejudiced and that's not my intention. Not-smart people speculate constantly and I doubt they recognize it; it's hard to recognize speculation in our society. Smart people are the worst: their speculations sound reasonable/smart. Smart people silently-speculating are like Homer's sirens: sounds good until you're dashed on the rocks.

Excellent points. Wish I had written this comment. =]

Denoting when you're speculating is definitely important. It can help to deconstruct the problem - a bit like a well-placed assert statement.

I speculate that Microsoft snapped up Nokia because they threatened starting an Android line of phones.

Remember that MS makes money off Android phones.

MS also gets a nice patent bonus along [..] Apple admitted defeat in its patent fight with Nokia, something it hasn't done with anybody else

Apple has (well had but I'd bet dollars to donuts it was renewed) a patent cross-licensing agreement with Microsoft so this could be a win for Apple as well.

Remember that MS makes money off Android phones.

Purportedly. I engaged in a debate on here before which involved trying to find the supposedly enormous sums of money that Microsoft makes from Android in their quarterly financial statements. At best it has to amount to what would be chump change to a company like Microsoft.

Instead we hear about supposed agreements where vendors who all happen to also be Windows Phone makers pay some unknown sum to Microsoft, which for all we know is used towards their WP licensing.

If Nokia released Android phones it would been devastating to Microsoft's mobile platform. It would have ruined it.

I think people dug into their latest earnings and made a case that MS did make a few hundred mil on Android phone licenses.

But you're right: it's chump change to MS, and Nokia putting out even a single Android phone would have been a huge blow to MS.

I think this is where the message gets mixed. It's not about how much Microsoft makes, its that apparently Microsoft makes more from Android than Windows phone[1].

[1] http://www.infoworld.com/t/android/microsoft-makes-more-andr...

I have no specific knowledge at all of any cross-licensing here (and if I did, I surely won't comment on it in public), but from the few license deals I very tangentially know of, they happen in terms of portfolios of assets valid at a given time for a given period. That is, you get rights to portfolio X of N issued patents for M years, and I get rights to portfolio Y of P issued patents for Q years. We negotiate to assign some value to those portfolios, and if they don't even out, somebody pays the other a royalty.

However, I cannot imagine anybody signing an eternal, all-encompassing cross-licensing deal to each others' portfolios. This is for many reasons, one simply being that one never knows what could be invented, and another being one simply doesn't know when the other will stop inventing and thus, reciprocating.

Yes, Apple certainly has a cross-license deal in place with MS (in addition to the one from the 90s, given the number of UI features WP shares with iOS but has not been sued over). But I would be very surprised if this acquisition was included in those deals. Rather, the relevant cross-licenses were made when Apple settled with Nokia.

> Remember that MS makes money off Android phones.

Yes, but I assume not nearly as much as they'd make from the sale of their own phone system tied into their own application and media ecosystem. On average, this coupling would keep producing revenue long after the original sale.

Microsoft's own press release makes clear that they are not buying any patents. They are buying a 10-year license to Nokia's patents.

http://www.microsoft.com/en-us/news/press/2013/Sep13/09-02An...

This is almost certainly to lubricate regulatory approval, and because it unleashes a Nokia patent monster upon the lands.

> ...they are not buying any patents. They are buying a 10-year license to Nokia's patents.

That's basically the same isn't it? A patent can only remain active for 20 years, assuming most of the patents are several years old the majority of them will be pretty close to expiration in 10 years time.

Note: I'm basing this on NZ patent law, but I assuming it's the same for any 1st world country...

That's basically the same isn't it?

If Microsoft owned the patents they could enforce them against others. As a licensee, they simply protect themselves from Nokia enforcing it against them.

As I said elsewhere in here, a Nokia with a big stack of patents and no hardware business is going to be an ugly thing for the industry: They can go gangbusters with patent assaults while having nothing for their victim's to attack in return. All the while Microsoft will be enjoying their 10-year license.

> As a licensee, they simply protect themselves from Nokia enforcing it against them.

Hmm that sounds rather a lot like mafia. "Pay up or else, no matter whether we're owned by you."

So it smells like a very similar move to the SCO-attack on Linux. Microsoft competitors could get legally assaulted by a zombie Nokia while Microsoft itself is not associated with the legal fight.

> If Microsoft owned the patents they could enforce them against others.

Thanks for the clarification, that makes sense

You seem to be right. Here's an article [1] with details about the transaction.

The main points of the deal are:

- Microsoft pays € 5.44 Billions for all of its Devices & Services business, including the Mobile Phones and Smart Devices business units as well as an industry-leading design team, operations including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities, and related support functions.

- Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of the closing (with option to extend to perpetuity), and Microsoft will grant Nokia reciprocal rights related to HERE services.

- Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four year license.

- Microsoft has agreed to make immediately available to Nokia EUR 1.5 billion of financing in the form of three EUR 500 million tranches of convertible bonds to be issued by Nokia maturing in 5, 6 and 7 years respectively. It is at Nokia’s discretion if it chooses to draw down all or some of these tranches.

- To avoid the perception of any potential conflict of interest between now and the pending closure of the transaction, Stephen Elop will step aside as President and CEO of Nokia Corporation, resign from the Board of Directors, and will become Executive Vice President, Devices & Services

[1] http://www.efinancehub.com/nokia-corporation-adr-nysenok-doi...

This particular deal point is interesting to me:

Microsoft will also immediately make available to Nokia EUR 1.5 billion of financing in the form of three EUR 500 million tranches of convertible notes that Microsoft would fund from overseas resources. If Nokia decides to draw down on this financing option, Nokia would pay back these notes to Microsoft from the proceeds of the deal upon closing. The financing is not conditional on the transaction closing.

Sounds like Nokia may be running into a cash crunch? They specify that the financing is not dependent on the transaction closing - so it seems as if Nokia needs the money either way, and if the transaction closes they will repay MSFT.

Cheaper to buy them with money stuck overseas than repatriate and pay taxes on it.

True....very good point.

Interesting.

Why yes, you're right! I totally missed that. And your rationale makes sense as well.

As for the Nokia patent monster, well... it's already been rampaging the countryside for a few months now. I haven't thought through the ramifications of this deal, but I wonder if it would allow them the same immunity that trolls enjoy?

Also, I just realized, the rampaging patent monster is another reason MS did not buy the patents outright. Nokia has active lawsuits against many companies and I doubt anybody wants to inherit that kind of baggage.

No, but MS just found a way to bootstrap it.

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