Best of the Week
Most Popular
1.U.S. Housing Bull Market Over? House Prices Trend Forecast Current State - Nadeem_Walayat
2.The Coming U.S. Economic Collapse Will Trigger a Revolution - Harry_Dent
3. Stock Market Crash a Historical Pattern? - Wim_Grommen
4.Global Panic - U.S. Federal Government Stockpiling Ammo – Here’s What We’re Going to Do - Shah Gilani
5.AI, Robotics, and the Future of Jobs - Aaron Smith
6.This is Your Economic Recovery With and Without Drugs - James_Quinn
7.Gold and Silver Price Getting Set To Explode Higher - Austin_Galt
8.The Something for Nothing Society - Lifecycle of Bureaucracy - Ty_Andros
9.Another Interesting Stock Market Juncture - Tony_Caldaro
10.Inflation vs the Deflationary Straw Man - Gary_Tanashian
Last 5 days
Scottish Banks Salivating at the Prospects for an Independent Scotland of 6 Million Debt Slaves - 1st Sep 14
Small Man Europe Is Now In “Effective State Of War” With Russia - 31st Aug 14
The Unintended Blowback Of False Flags - 31st Aug 14
Tesco Supermarket Death Spiral Latest Profits Warning and Dividend Slashed - 31st Aug 14
Dow, Gold and Silver - A Last Stand, A Fake Out And A Surge - 31st Aug 14
If U.S. Consumers are so Confident Why aren't They Spending? - 31st Aug 14
Scotland Independence House Prices Crash, Deflationary Debt Death Spiral - 31st Aug 14
Obama’s “Catastrophic Defeat” in Ukraine - 30th Aug 14
Stock Market Inflection Point Approaching - 30th Aug 14
Gold And Silver - Elite's NWO Losing Traction. Expect More War - 30th Aug 14
Corporations Join Droves of Americans Renouncing US Citizenship - 30th Aug 14
Peter Schiff U.S. Housing Market, House Prices Bubble Warning - 30th Aug 14
Russia, Ukraine War - It’s Time to Play the “Gazprom Card” - 29th Aug 14
The One Tech Stock Investment You Should Never Sell - 29th Aug 14
Bitcoin Price $500 as Current Downside Barrier - 29th Aug 14
Don't Get Ruined by These 10 Popular Stock Market Investment Myths - 29th Aug 14
Low Cost Transcontinental Gold - 29th Aug 14
Gold Bullish Central Banks Should Give Money Directly To The People - Helicopter Janet? - 29th Aug 14
US House Prices Bull Market Over? Trend Forecast Video - 29th Aug 14
The Fed Meeting at Jackson Hole Exposed Yellen’s Greatest Weakness - 29th Aug 14
AAPL Apple Stock About To Get sMACked - 29th Aug 14
A History of Unlimited Money: Learn From It or Repeat Its Mistakes - 29th Aug 14
How You Can Play to Win When Market Makers Are Calling the Shots - 28th Aug 14
EU Gas Supply Is In Real And Imminent Danger - 28th Aug 14
Central Banks at the Root of Evil - 28th Aug 14
European Bond Market: Bubble of all Bubbles! - 28th Aug 14
Employers Aren’t Just Whining: The “Skills Gap” Is Real - 28th Aug 14
The ISIS Menace - Just What We Need, Another War - 27th Aug 14
The Risky Business of Methane-Rich “Fire Ice” - 27th Aug 14
CFR Recommends Policy Shift that is Very Bullish for Gold - 27th Aug 14
Ukraine Standoff Signals Global Power Shift - 27th Aug 14
Stock Market Panic Decline Begins - 27th Aug 14
The Monopoly of the Government Education Cartel - 27th Aug 14
How to Invest in Silver Today for Double-Digit Gains - 27th Aug 14
The Big Solar Energy Breakthrough We've Been Waiting For - 27th Aug 14
U.S. Empire’s Bumpy Ride - 27th Aug 14
Gold Market and the Interest Rate Trap - 27th Aug 14
Stock Market Staring Into the Great Abyss - 27th Aug 14
A Look at the Coming 30-year Inflation Cycle - 27th Aug 14
Forex Trading - Will USD/CHF Rally Above 0.9200? - 27th Aug 14
Europe’s Depressing Economy Dog Days of Summer - 27th Aug 14
How The Coming Silver Price Bubble Will Develop - 26th Aug 14
A Nation of Shopkeepers - Supply-Side (Voodoo) Economics? - 26th Aug 14
Stock Market Bear Tracks Abound In Wall Street - 26th Aug 14
65,000 U.S. Marines Hold up a Mirror to the Economy - 26th Aug 14
Bitcoin Market Provides Clues for Investors - 26th Aug 14
The Key to Trading Success - 26th Aug 14
Will The US Succeed in Breaking Russia to Maintain Dollar Hegemony?... - 26th Aug 14
Even Mainstream Academia Worried about Massive Bubbles in Markets - 26th Aug 14
Iraq and Syria Follow Lebanon's Precedent - 26th Aug 14
Colonization by Bankruptcy: The High-stakes Chess Match for Argentina - 26th Aug 14
Dow Stock Index On The Cusp - 26th Aug 14
Prohibition Laws and Agency Regulations - 26th Aug 14
Will Canadian Regulators be Able to Avoid Final Fatal TSX Venture Exchange (TSX-V) Crash? - 25th Aug 14
HUI Gold Mining Stocks Elliott Wave Projection - 25th Aug 14
Stock Market Uncertainty Resolved With New High - 25th Aug 14
Go Forth Multiply And Replenish The Earth - 25th Aug 14
Dollar Dumping: When Actions Speak Loudest - 25th Aug 14
A Plethora of Currency, Stocks and Precious Metals Chartology - 25th Aug 14
Why Isn’t Fed Monetary Pumping Helping the U.S. Economy? - 25th Aug 14
Myths About Money and Inflation - 25th Aug 14
The Fed Will Raise U.S. Interest Rates in March 2015 - 25th Aug 14
Gold Price Manipulation Still Alive - 25th Aug 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

Mobile Computing Patent Wars Could Cost Google $2 Billion Annually

Companies / Google Jul 19, 2011 - 09:33 AM GMT

By: Money_Morning

Companies

Best Financial Markets Analysis ArticleDavid Zeiler writes: A mobile computing patent war launched by powerful tech rivals could snatch revenue away from Google Inc.'s (Nasdaq: GOOG) Android platform - and possibly threaten its viability as a free alternative operating system.

The threat to Android endangers as much as $2 billion in annual revenue for the search titan.


Google's rivals - which include such tech giants as Microsoft Corp. (Nasdaq: MSFT), Apple Inc. (Nasdaq: AAPL) and Oracle Corp. (Nasdaq: ORCL) - have filed 48 patent infringement lawsuits against the Mountain View, CA company and many of its hardware partners.

Google rarely countersues, the most common way of battling patent lawsuits, because of its relatively paltry patent portfolio. Google has only about 700 patents, compared to about 4,000 for Apple and more than 17,000 for Microsoft.

So it stung particularly badly when Google lost the most recent patent wars battle by failing to win the auction for bankrupt Nortel Networks Corp.'s (PINK: NRLTQ) 6,000 patents earlier this month.

Instead, a consortium of its mobile computing competitors - Apple, Microsoft, Research in Motion (Nasdaq: RIMM), Sony Corp. (NYSE ADR: SNE) and LM Ericsson (Nasdaq ADR: ERIC) - won the Nortel patents with a bid of $4.5 billion.

"In the patent wars that are raging in the mobile computing world, this could turn out to beGoogle's Waterloo," observed The Financial Times.

U.S. and Canadian judges approved the Nortel sale at a joint hearing July 11.

"Googlelost an unprecedented opportunity to acquire a major bargaining chip that would strengthen it at the mobile industry's intellectual property negotiating table," Florian Mueller, an intellectual property analyst and blogger, told Computerworld. "I'm afraid it won't get a similar opportunity in quantitative and qualitative terms anytime soon."

Threat to Revenue
Although most of Google's profits still come from search, it has invested in ventures like Android to sow the seeds for future revenue growth. But with Google faring badly in the patent wars, revenue from Android may fall far short of expectations.

According to research done earlier this year by Piper Jaffray Companies (NYSE: PJC) analyst Gene Munster, Android generated about $5.90 per user for Google in 2010. That translated to $130 million last year, assuming 22 million users, with the money primarily coming from mobile advertising. Google provides Android itself at no charge.

But Munster's projections show how Android could become a source of much fatter profits. Back in February he estimated Android revenue growing to $9.85 per user in 2012, and growing to 133 million users for revenue of $1.3 billion.

But Android adoption already has exceeded Munster's projections. Google said last week it has 135 million users right now, and new activations are running at a rate of 500,000 per day.

At that rate, Android would have 220 million users by January of 2012, which would push Google's annual mobile revenue past $2 billion. While that's only about 5% of Google's total annual revenue of $36 billion, it does represent revenue from a fresh source.

With Android such a big piece of Google's business strategy, you'd think the company would have done more to defend its intellectual property (IP).

In fact, the Nortel battle was supposed to be Google's counterstrike. The company's "stalking horse" bid of $900 million was thought by most observers to assure Google of victory and give it the ammunition it lacked in the patent wars.

And at first it appeared Google would prevail - it was up against Apple, Intel Corp. (Nasdaq: INTC), and the consortium led by Microsoft. In the fifth and sixth rounds of bidding, however, the players reorganized - Apple joined Microsoft's consortium and Intel partnered with Google.

It was a high-stakes faceoff between the deepest pockets in Silicon Valley, and Google blinked first.

Avalanche of Lawsuits
The loss of the Nortel patents means Google and its hardware partners can look forward to more lawsuits.

Microsoft has led the way so far, successfully suing HTC Corp.n (OTC: HTCXF) and four other smaller companies to extract fees ranging from $5 to $12.50 per handset. Suits against Motorola Mobility Holdings Inc. (NYSE: MMI) and Barnes & Noble Inc. (NYSE: BKS) are pending, and Microsoft is demanding similar fees from Samsung Electronics LTD (PINK: SSNLF).

Oracle, citing patent violations of the Java software it acquired with Sun Microsystems last year, has filed a suit directly against Google as well as against numerous handset makers, from whom it is seeking licensing fees as high as $20 per unit. The Google suit seeks damages "in the billions of dollars."

Apple has sued Samsung, Motorola and HTC, although Apple seems to be more interested in killing its rival's products than extracting licensing fees.

A key goal of the patent wars is to reduce the appeal of Android to the handset makers.

Microsoft, for example, will happily sell a Windows Phone 7 license to a handset maker for a mere $5 to $10 per unit, less than what it likely will cost to pay an array of Android patent licensing fees. And Microsoft indemnifies its licensees against any future patent disputes.

Microsoft is betting most handset makers will adopt Windows Phone 7 as a less expensive and less risky option.

And don't forget how those licensing fees could add up for Microsoft and Oracle (and Apple, if they decide to hop on that bandwagon). Some believe Microsoft could end up with as much as $1 billion in annual Android patent revenue - money that's virtually pure profit.

Although Android has yet to feel the impact of the patent wars - it has quickly grown to run 40% of all smartphones sold - Google's arrogant attitude towards IP and inability to win any battles have placed the innovative operating system in serious jeopardy.

"[Google] had this combination of thinking patents were from the devil, while they were on a mission from God," Ron Laurie, managing director of Inflexion Point Strategy LLC, told Bloomberg News. "After getting attacked so often, they started getting it."

Source :http://moneymorning.com/2011/07/19/mobile-computing-patent-wars-could-cost-google-2-billion-annually/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014