What does $3.2 Billion buy you?

Motorola – a Google company, no more.

What?

In August 2011, Google bought Motorola Mobility for a reported price of USD 12.5 Billion. This included cash and credits of about USD 4 Billion. Net price paid: USD 8.5 Billion.

After a year and a half of shedding employees and departments, and putting some of its own execs in-charge, Google sold the home equipment business of Motorola to ARRIS in December 2012, for USD 2.35 Billion.

Finally, on 29 Jan 2014, Google sold the remaining operations of Motorola Mobility to Lenovo for USD 2.91 Billion. Except the patents. It kept the patents for itself.

Why?

So, after all the buying and selling ended, Google ended up picking a bill of about USD 3.2 Billion. What did they get for that not-so-insignificant amount?

Some, from one end of the tech divide, will tell you they got some dud patents and a hole in the pocket.

Others might differ. Martin Bryant put out one insight on Twitter:

Google keeps most patents after reviving an ailing player in the Android ecosystem: a Machiavellian scheme if it was all preplanned.

[Update] Chris Lacy had other angles in mind:

Samsung made app concessions, Google left phone hardware & there’s a S/G patent deal. Lots more to this. Reporters, go investigate & report.

[/Update]

The truth, I guess, is somewhere in the middle. Google did end up brilliantly reviving an ailing player, one with a strong existing brand, in the Android ecosystem. They still might have overpaid for the patents, though no one will ever really know unless they’re tested in a court. The sale also helped assuage any troubled feeling amongst other players in the Android ecosystem who may have started feeling threatened by a reviving Motorola owned by Google. Individually, none of them seem worth the money. Together, they start to seem like a master stroke.

The Answer

So, to answer the question in the title: USD 3.2 Billion buys you about 20,000 patents (incl pending) of some value, a vibrant market for your product (Google’s flavour of Android), cooperation of key market partners, and a stake in a fast growing but controversial market without having to directly invest there (Lenovo operates, and is HQed, in China!)

Google got a great deal, me thinks!