Healthcare Matters

Developing and maintaining an effective IP strategy is a challenging but essential step in preparing to take innovations to market. Knowing what patent references exist in the areas where you intend to innovate is mission critical. So if you’re Google, and you want to run past Apple, you need a formidable bank of relevant Intellectual Property (IP –lots of mud on the wall that you also happen to own) or you’re going to become known as “that guy” who keeps bringing a knife to a gunfight.

Google’s move today to acquire Motorola Mobility (MM) for $12.5 billion –and with it, the largest library of patents and patents pending available in the mobile device marketplace— is a game changer. “Our aim is simple,” Denis Woodside, Google’s named CEO for MM said in a prepared statement. “To focus Motorola Mobility’s remarkable talent on fewer, bigger bets, and create wonderful devices that are used by people around the world.”

Looking for hints: Mark Randall, who worked at Amazon.com on the Kindle, was hired by Woodside and will lead supply chain and logistics.

Google was tired of being on the defensive. It was vulnerable to infringement lawsuits. And its competitors would have kept it coming, forever biting at its heels, had it not made a move of this magnitude. Now it has a chance. But before we give a standing ovation to what certainly is nothing more than a text book move –albeit a bold one– consider the flip side.

The company was already struggling to make money on Android. Now, they’re paying $12.5 billion for a failing company that is only available because it whiffed on making the changes required to maintain its initial dominance. Google nailed the search market but, despite billions in expenditures, it hasn’t yet successfully created a second hook to hang its hat on. It keeps buying the pieces, but does it have the experience and luck required to put them together?

Google claims it will keep Motorola at arms length, so those ready to assume that this is a hardware/software Apple-like integration play should carefully consider what the company is saying and recognize why. For example, licensees like Samsung, HTC and LG all rely on the Android OS. And hardware margins not only pale by comparison to such license fees (just ask MM) but they aren’t even in the same orbit as the ad margins that are core to Google.

Despite Larry Page’s grand ambitions (Page is Google’s CEO), and the fact that he has put Google in the hardware business, don’t bet on Google wandering too far from its core.  At least not for awhile. Google’s acquisition of Motorola’s patent library made the deal strategic. Google’s manufacturing capacity is now a tactical weapon.

—Tom Finn