And the next level war has begun. Yes, I am referring to the intellectual property war where companies are targeting others who are patent poor, where companies are acquiring others, not for economies of scale, but for their intellectual properties.
The recent $12.5 billion acquisition of Motorola by Google and the $4.5 bn auction of Nortel’s patents by Apple,Microsoft and RIM are the signs of the upcoming IP war. Now, the interesting point as why does a company like Google with $39 bn in cash pay such a huge premium to Motorola? Well, though a company has money, it is not easy to create IP. Putting it in other way – Investing 10x more money in research doesn’t increase assure me of any quick success of 10x results?
Also, companies like Google who are relatively new kids in the industry will require more time to create own IP. Companies like Apple, Motorola and Microsoft have a clear advantage over Google here. Their decades of research have created a rich patent portfolio where they can exercise muscle over relatively newer players. Many companies even cause troubles for others by suing them over patent copying. Hence, Google had cleverly acquired the 17000 patents portfolio, though at a huge premium.
It is time to witness some interesting moves in the industry and how truly can Google leverage the IP wealth it has acquired.
