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A Motorola tablet computer running Google's Android operating system. Google bought Motorola's mobile devices unit today in a deal worth $12.5bn. Paul Sakuma/AP
Patent war

Was Microsoft about to do a major patent deal with Motorola?

One of the reasons Google paid so much for Motorola may have been because Microsoft was about to strike a deal itself.

GOOGLE IS PAYING a huge premium – of over 60 per cent – to buy Motorola Wireless, and has thrown in a $2.5 billion breakup fee if the deal goes through.

Om Malik of GigaOM says one possible reason is that Microsoft was close to buying Motorola itself.

But a source familiar with the situation says that’s not true – Microsoft never considered a full acquisition, and did not make a bid.

That’s consistent with what many sources at both Microsoft and Nokia have told us recently – Microsoft simply doesn’t have the stomach for the mobile hardware business.

The inventory challenges and low margins are at odds with Microsoft’s history as a software company (the Xbox being the one exception – and that’s basically turned into a software and services business as well).

Plus, buying Motorola outright would have put a real wrench into the Nokia partnership, putting Microsoft into direct competition with its premier Windows Phone reseller.

Our source confirms that Microsoft was interested in Motorola’s patents, as Malik reports.

Most likely, Microsoft was close to settling its patent dispute with Motorola, and signing a cross-licensing deal like it’s done with HTC and other companies.

With more than 17,000 patents plus another 7,500 pending, Motorola could have given Microsoft a lot more ammunition against Android. So for that reason alone, Google was smart to make the bid and take those patents off the table.

Our source tells us that Microsoft is now less likely than ever to make a full bid for Nokia or Research in Motion, the makers of BlackBerry.

Instead, it thinks that the Motorola-Google deal puts it in a great spot, as it will drive multi-platform vendors like Samsung and HTC — and perhaps even RIM — to consider Windows Phone more closely than ever before.

Read: Google buying Motorola Mobility for €8.7 billion in cash

Published with permission from
Business Insider