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Platinum NO RATINGS 
I think we have to play a wait and see game here. Losing market share of a business that generates little profit ( the Android OS) may not be bad if you develop a phone business anywhere near as profitable as the iPhone. Market share and profits are not the same thing. They might also provide hardware guidelines to the licensees to help the end user get a better experience with Android. While there are potentially bad scenarios out there, not all of them are bad. let's give the benefit of the doubt to the Google management and wait to see what emerges.
 User Rank
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This deal also gives Google control over Motos set-top box buisness, I was hopeful for a Google TV intergrated STB, but I think it is far more likely that Google will be selling off the STB side of the business.
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But GoogleTV is another loss leader that hasn't really shown any ROI for Google. It just seems to me that they are starting to spread themselves very thin, do everything, yet all of their revenue still comes from their core product -- adwords and search.
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GoogleTV is a black hole for money right now, But I think if they were able to get it intergrated into a main stream STB platform it would take off. Though I think a lot of the revenue from it would be generated via advertising and search.
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Yes I understand they want ad revenue and that is part of the problem -- I think the broadcast TV understands they don't want to be shanghai'd the way Google took down newspapers and Apple took down the music industry.
Here's the thing about TVs and content -- I like high-quality produced content. I like my DirectTV DVR. I can watch whatever I want by programming it. That in itself takes away a lot of the advantages of the Google Internet model. Just give me a slightly better DVR box with lower latency and access to a larger film library and I'm happy. Also I can already get Netflix and lots of streamed content from my Xbox -- so I'm trying to figure out what GoogleTV has that I don't have already have through that combination. Any thoughts? User Rank
Platinum NO RATINGS
Scott,
I think one of the key features here is aggragating all that content to a single device. if GoogleTV were to have used the Moto DOCSIS STB for their new platform it would put them in the cable customers home. so now the same DVR you use could be used not only to access the high quality content you desire but also other web content that might not be avlaible on a device such as the Xbox or PS3 or Wii. Google has also begun to attract bigger content producers to develop new content on YouTube, though its pretty limited right now, they have laid out a map for launch dates for this year. If at the end of the day it gives you access to more content on a signle device I think that is a good thing. Things like Netflix have become far less of a threat to the cable model then just a few years ago. 2 years ago Netflix was offering more movies then anything, now the majority of their content is TV shows, an not much of what they offer overlaps with cable providers current VOD offerings, I think Netflix is positioned more as a suplement then a threat at this point. I might very well be a good time for a platform like GoogleTV to put them in bed together... User Rank
Blogger NO RATINGS
"Things like Netflix have become far less of a threat to the cable model then just a few years ago"
Right, that's kind of what I'm saying. The competitive advantage is not in the technology, it's in the content. That's why I think the media companies are wising up and they're not just going to hand their content over to Google (the Internet). User Rank
Platinum NO RATINGS
I dont think they should just hand it over. but I think there is value in letting people access your content via a platform like GoogleTV or Roku or Boxee. Much in the same way I see there being value for MSOs intergrating these featuers into their STBs. All the companies make some money, and the consumers of the media get more content. I think the big problem would come from figuring out who gets what piece of the pie.
I know that Boxee has also been shoping around to try and find a STB partner, but I think they would have to get out of hardware sales first for a major player like Moto or Cisco/SA to even consider it.  User Rank
Iron NO RATINGS
@TelecomFreq,
You mentioned "This deal also gives Google control over Motos set-top box buisness, I was hopeful for a Google TV intergrated STB, but I think it is far more likely that Google will be selling off the STB side of the business". Google TV might be a brilliant idea, but paying 12.5 billion for a possiblility on an intergrated STB seems too much. What's so special on Motos STB? User Rank
Platinum NO RATINGS
@minvestor,
They did not pay 12.5 billion for the STB buisness, they put the money up for the 17K patents and the mobile product line of Moto, the STB was something that just happened to fall under Moto Mobility and was part of the deal.  User Rank
Platinum NO RATINGS
The MMI stock drops to $37 last week, and I think it is the best arbitrage opportunity of the year. If Google closes the deal in first half of the year as promised, the real return = 3/40 *(12/3) = 30%.
Ok, some investors will ask what about the downside: the merger doesn't go thorugh. Can Google afford to drop the deal? This is the same question as: Can Google afford to lose Android? Google has only about a hundred home-brew patents to protect its No.1 Mobile platform. Without MMI's patent, Google & its hardware vendors will be an easy target for vultures like Apple, Microsoft, Oracle, etc. MMI's patents turn Google from a prey to a predator. MMI has not debt with 3.3B net cash. Google has a penalty of 2.5B if it walks away from the deal. Maybe $5.8B dollars is not big deal for Google, but it is enough buffer for any kind of short term diaster. As TelecomFreq points out, the Motorola set-top box is a hidden gem of the deal. Cisco paid $6.9B for Scientific Atlanta in 2006 and $5B for NSD this year, just to beef up its settop box business. Guess who is the No. 1 in set top box? It is MMI, not Cisco. Google acquired MMI for Patent portfolio, nothing more, nothing less. After ripping off the patent portfolio, Google will either spin off the MMI or sell MMI to some other hardware vendors, like Huawei, or HTC. I doubt Google has the guts to digest the MMI's hardware business, even it can be a very profitable business under right leadership. User Rank
Iron NO RATINGS
Value Hiker,
Good analysis, that's pretty close to what I thought. I don't see Google becomes a hardware company. But the potential buyers could be Huawei or HTC? That will be interesting. User Rank
Platinum NO RATINGS
Remember Google will take away MMI's patents. Google must sell MMI to someone who focuses on the hardware design & manufacturing business, not someone who want vertical integration like Samsung or LG. I think Huawei is the best match so far.
User Rank
Iron NO RATINGS
Maybe you are right. But sometimes Chinese companies have their agenda. So it's interesting to see how things play out.
User Rank
Platinum NO RATINGS
The only real risk to the Google and MMI deal is the antitrust investigation from Chinese Government. Any one in the mobile industry long enough knows the deal does not present a monopoly risk. But the relationship between Chinese government and Google is so resentful, I am sure Chinese Government will delay the deal and teach Google a lesson. Hope the good relationship between Motorola and Chinese government will save it deal at the end.
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Blogger NO RATINGS
@Value Hiker
Sorry if I've forgetting something big... When's the last time the Chinese government on a big tech deal in the United States? I also strongly disagree with the statement that this is the "only risk." Google is a software company with high margins. investors hate shrinking margins. If it really does embed a hardward company, a lot could change. User Rank
Platinum NO RATINGS
@Scott, you are right that investors hate shrink margin. But in Google case, investors matter little to the management team. Why does Google have a dual class stock structure? Just for case like this.
Larry Page, Sergey Brin, and Eric Schmidt have more voting power than the rest of all other investors. They are free to make any decision they like. The acquisition of MMI was approved by the Big Three. As I said in my previous post, I don't think Google has other options after it failed to bid the Nortel Patent sale. Google will lose the Android platform if it loses the MMI patent portfolio. Investors may not like the ideal of acquiring MMI, but will they like the idea of losing Android? User Rank
Blogger NO RATINGS
@ Value Hiker
Yes I undertand your points. They need the patents. I also believe Android is in danger. Perhaps they think the only solution is to roll it up into one vertically integrated franchise, a la Apple. However I think that's dangerous for Google it is a completely different model. For example, imagine what had happened to Microsoft if it had bought Dell or Intel? I think the best outcome for Google investors is if they gain control of the patents and them somehow spin off the hardward business as an independent entity. I don't think integration will go well. User Rank
Platinum NO RATINGS
People likes to compare the PC era with mobile Internet era. But history never repeated itself in the exact same pattern. Google is not Microsoft, Arms is not Intel, and Apple is not old Apple.
I am neutral about possible vertical integration between Google an MMI. MMI is a mediocre company in management and execution, but it is in the hotest areas of mobile internet industry: mobile handset, set top box, home connection. If Google does the right thing, it will open many big growth areas for Google's future. But we all know Google never made any real profit from dozens of its acquisitions. That is what many investors worried about. Samsung is not the Dell or HP of PC era. Its market share dominated the Android camp, surpassed both Nokia and Apple. Furthermore, it dominates the compoents market of mobile handset, both Android and iOS=> Samsung makes about 25% of iPhone's components. The only missing part of Samsung's vertical integration chain is a great OS. After seeing how Amazon hijacked Android with Kindle Fire, Samsung started to work very hard on its own OS now. Once it is done, Samsung will become another Apple, no matter Google integrated MMI or not. It is a hard choice for Google, hope Google make the smart move. User Rank
Platinum NO RATINGS
@Scott, Google just announced that the Chinese government is ok with MMI acquisition, and the deal will be closed next week.
http://online.wsj.com/article/SB10001424052702303360504577414280414923956.html?ru=yahoo&mod=yahoo_hs If investors purchased shares at $37 three weeks ago, the real return of this arbitrage = 3/40 * 12 = 90%, not bad comparing to the less than 1 percent return of CD.  User Rank
Blogger NO RATINGS
A German court ruled on Wednesday that Microsoft infringed Motorola Mobility's patents in making its Xbox gaming consoles.
Judge Holger Kircher said Microsoft breached an agreement with Motorola, which is in the process of being bought by Google, by applying certain video-compression software in products including Windows 7 and the Xbox 360 videogame console. In the ruling, the judge ordered Microsoft to remove its popular game console as well as its Windows 7 operating system software from the German market. User Rank
Blogger NO RATINGS
@Noreen,
Nice find. That's a big one! I missed it... User Rank
Blogger NO RATINGS
More fun with patents...
A US JURY has found that Google's Android infringes Oracle's copyrights on Java APIs, in the first stage of a high-stakes court battle between the two companies. The verdict reached on Monday handed Oracle a partial victory in the first phase of its three-part trial against the internet giant. The jury in US District Court in San Francisco was charged with four questions about copyrights in Java code used in Android. The blogs and comments posted on Investor Uprising do not reflect the views of Investor Uprising, PRNewswire, or its sponsors. Investor Uprising, PRNewswire, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose. |
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