Best of the Week
Most Popular
1.Scottish Independence YES Vote Panic - Scotland Committing Suicide and Terminating the UK? - Nadeem_Walayat
2.Your “Last, Best” Chance to Buy Apple Stock at a Bargain Price - Michael A. Robinson
3.Gold and Silver Price Ready To Go BOOM - Austin_Galt
4.Please Scotland, Blow Up The European Union - Raul_I_Meijer
5.Gold and Silver Potential Price Meltdown Scenario - Rambus_Chartology
6.Scottish Independence UK Catastrophe - The Balkanisation of Britain - Video - Nadeem_Walayat
7.The Truth About Where Gold Price Is Headed - Chris_Vermeulen
8.The Price Of Gold And The Art Of War Part I - Darryl_R_Schoon
9.World Stock Markets Are Topping - Dow, ASX, BSE, DAX and FTSE Analysis - Austin_Galt
10.Gold And Silver New World Order of Deceit, Debt, and War. PMs A Casualty - Michael_Noonan
Last 5 days
Why ECB QE Is Bearish For Gold Prices - 15th Sept 14
Property Rights and Property Taxes—and Countries That Don’t Have Them - 15th Sept 14
Junior Miners Breaking Out Higher Forecasting Gold and Silver Price Bottom? - 15th Sept 14
Stock Market Patiently Waiting for Mean Reversion - 15th Sept 14
A Closer Look at the US Dollar - 15th Sept 14
The Silver Price Sentiment Cycle - 15th Sept 14
Stock Market Correction Underway - 15th Sept 14
Marc Faber - “I Want To Be Diversified, I Want To Own Some Gold” - 15th Sept 14
The Myth of Nuclear Weapons - 15th Sept 14
US Dollar Forecast to Go Much Higher - 15th Sept 14
Analysis And Price Projection Of The Uranium Market - 15th Sept 14
Bank of England Panic! Scottish Independence Bank Run Already Underway! - 15th Sept 14
The Ethics of Entrepreneurship and Profit - 14th Sept 14
The Big Investor Opportunity in the Orbital Space Junkyard - 14th Sept 14
Kohl's and The Rest of The Retailers are in Deep Doo Doo - 14th Sept 14
Independent Scotland Will Disintegrate as Unionist Regions Demand Referendum's to Rejoin UK - 14th Sept 14
Stock Market Pullback Continues - 13th Sept 14
SNP Fanatics Warn of Day of Reckoning for Scottish Independence No Campaigners - 13th Sept 14
Scottish Independence Would Shake Up the Global System - 13th Sept 14
The World Order Becomes Disorder - 13th Sept 14
Is Geothermal Power About to Become The Next Great Battleground Over Fracking? - 12th Sept 14
Heavy Gold and Silver Shorting is Bullish - 12th Sept 14
Strong U.S. Dollar Undermines Gold and Silver - 12th Sept 14
Debt And The Decline Of Money - 12th Sept 14
Panic On The Streets Of London ... Can Scotland Ever Be The Same Again? - 12th Sept 14
Will The Real Silver Commercials Stand Up? - 12th Sept 14
If You Own Only One Investment, Make Sure This Is It - 12th Sept 14
Main Reason Why Scotland Will Vote NO to Independence, 70% Probability - 12th Sept 14
Better Days Ahead For U.S. Stock And Housing Market - 12th Sept 14
U.S. Meddling Dims Prospects for Ukraine Peace - 12th Sept 14
Is the Fed Preparing to Asset-Strip Local Governments? - 12th Sept 14
China Holds “Gold Congress” - Positioning Itself As Global Gold Hub - 11th Sept 14
Fire Ice Could be Energy's Magic Bullet or a Planet-killing Catastrophe - 11th Sept 14
The Mass Psychosis Of 9 /11 Will Never Be Healed - 11th Sept 14
Radical Islam's Crisis of Competing Caliphates - 11th Sept 14
Ukraine Crisis And Self-Determination - 11th Sept 14
Cameron and Miliband Desperately Attempt to Prevent Scotland Committing Suicide - 11th Sept 14
A Supply Crunch Points to Higher Uranium Prices - 11th Sept 14
The Myanmar Shadow - 11th Sept 14
Europe Takes the QE Baton - 11th Sept 14
Full Frontal Inflation - 11th Sept 14
Scottish Independence UK Catastrophe - The Balkanisation of Britain - Video - 10th Sep 14
Economic Reality of a Wealth Tax - 10th Sep 14
10 Year U.S. Treasury Short Best Place to be Remainder of 2014 - 10th Sep 14
Gold Bugs Shifting Sentiment - 10th Sep 14
Strong U.S. Dollar Weakens September Gold Price - 10th Sep 14
Here's Why Trendlines Are Your New Best Friend, Part 2 - 10th Sep 14
Gold, Stocks and US Dollar Long Cycles, Trend Changes - 9th Sep 14
AUDNZD Another Pullback Forex Trading Opportunity? - 9th Sep 14
A Better Way to Play Tesla’s Success in China - 9th Sep 14
The Price Of Gold And The Art Of War Part I - 9th Sep 14
What's With the Japanese Yen? - 9th Sep 14
Macro Factors Dominating Gold Price As US Dollar Outweighs Physical Demand And Investor Flows - 9th Sep 14
It's Time to Get a Bargain on Apple Stock - 9th Sep 14
Gold and Silver Potential Price Meltdown Scenario - 9th Sep 14
No Economy For Americans - 9th Sep 14
Did Putin Just Bring Peace to Ukraine? - 9th Sep 14
Suckering the Public on a War of Terror - 9th Sep 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Huge Stocks Bear Market

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