An hour ago, Google made the massive announcement that it’s agreed to acquire Motorola Mobility, which would give it a much stronger position in the mobile patent wars and also put it in direct competition with Android partners like HTC and Samsung.
Google is holding a conference call this morning to discuss the news. The call is beginning at 8:30 AM EST. My notes on the call, which I’ll be live blogging, are below. Note that most quotes will be paraphrased.
The call’s participants:
Larry Page, CEO Google
Sanjay Jha – Motorola CEO
Patrick Pichette – SVP, CFO, Google
David Drummond – SVP, Chief Legal Officer, Google
Andy Rubin – SVP, Head of Android
8:34 – The call is kicking off. Page is recapping the news. Recounting meeting with Andy Rubin six years ago. ‘Andy said it was inefficient for each hardware manufacturer to develop software separately…’ had an vision for an open platform. Revisiting the new stats (150 million Android devices worldwide).
8:37 – Discussing Motorola Mobility’s history. “Sanjay made a big bet… he bet big on Android as the sole OS.” Saying that we all know web usage is increasing on mobile and that’s going to continue. “Many hardware partners have contributed to Android’s success and we look forward to dealing with all of them on an equal basis…” Sajay and his team will continue to drive the Motorola business. Page references potential innovation in cable and telecom too.
8:39 – Jha is speaking now. Recapping Motorola’s recent successes. Brazil, China, Japan, Korea.
8:41 – Pichette. Key facts: Google will acquire for $40 per share in cash (recapping the press release). We will run Motorola as a separate business and will provide segmented reporting. This is a significant deal, but even with this deal have plenty of financial flexibility for future opportunity. Have completed over 120 acquisitions.
Q: Can we get an overview of Motorola patent portfolio?
… 1 minute of awkwardness as they try to get the phones working…
Drummond: We have said we intend to protect the Android ecosystem. We’re not prepared to talk about specific strategies. Having that kind of a patent portfolio is a good thing. Jha: We have over 17k patents issued worldwide. Many applications. Many in wireless standards, many around competitive parts in the marketplace.
Q: Around Android partners
Rubin: I talked to the top five licensees. They all showed enthusiastic support. Android doesn’t make sense to be a single OEM. All of our existing OEM partners help make it what it is today.
Q: What convinced you to acquire Motorola? You’re going to take on some competencies that aren’t core to Google.
Page: I’m really excited about this deal. There are competencies that aren’t core to us, but we plan to operate it as a separate business, so they have competency there. I’m really excited about protecting and supporting the Android ecosystem. We believe Motorola Mobility has a tremendous opportunity for growth. I think this is a unique opportunity.
Drummond (re: licensing demands, like those HTC pays): We’ve seen some licensing demands… the patent portfolio will help us make Android “open and vibrant”.
Q: Regarding Google potentially competing with other OEMs.
Page: No change in how we’re running Android. Android is still open. Our partners are very excited about this.
Rubin: Motorola was one of the early licensees. After the transaction nothing changes. It’s business as usual. It’s about protecting and extending the ecosystem.
Q: Acquisitions are increasingly drawing government scrutiny.
Drummond: This is a transaction given its size that will require regulatory approval in the US, certainly in Europe, and possibly other jurisdictions. We believe it will be approved. We believe very strongly this is a pro-competitive transaction. Increasing user choice, it’s pro-competitive, almost by definition. We will be filing the agreement shortly.
Q: Legal ramifications before/after the deal closes. How it changes things with lawsuits that have already been filed. How did you get to this price? Why all cash, no stock?
Drummond: Before acquisition closes, those lawsuits will continue and be managed by Motorola. Don’t think there’s anything to add there. Post-acquisition, we’re not going to talk about legal strategy, but we think we’ll be in a “very good position to protect the Android ecosystem for all of the partners”.
Pichette: Think we have a fair price for the transaction.
Q: How do you manage the business model issues related to the partners. How do you firewall issues that would come up (i.e. preferential treatment)?
Page: We’ve had tremendous success with ability to run ecosystem with a number of different partners.
Rubin: We have this strategy where we have this Nexus program and lead device strategy. We select, around Christmas-time each year, a manufacturer to release a phone. That includes all the components to build a device. Teams from the Android team and the manufacturer huddle together in a building and create these. We don’t expect that to change. After the acquisition Motorola will be part of that bidding process and lead dev. process. Android remains open to other partners (sidenote: sounds like there’s a bidding process to be involved in Nexus program).
Q regarding Motorola home devices.
Jha:We have a very close relationship with carriers in home space. There’s a transition to IP-settop boxes. And there’s a great convergence b/w mobile and set top box and content. We’ll be able to accelerate that conversion.
Drummond: Nothing to add about Oracle suit. Believe it isn’t founded, etc.
Q: About possibly acquiring more patents.
Drummond: We’ve said for some time that we need to build patent portfolio to make sure Android and other businesses can be successful. We will continue to do that.
Page sharing some final thoughts:
We are really excited about this whole business and working with the Motorola team and all the employees… There’s tremendous opportunity here. Android is growing like crazy, we think that will benefit all partners in the Android ecosystem. We’re very excited by those opportunities going forward. We believe M. Mobility is a place for tremendous growth. They’re a leading home devices maker, that’s a big opportunity. We’re working with them to accelerate innovation.