According to Eric Schmidt of Google the purchase of Motorola Mobile is also it’s own foray into physical products. This is promising but it’s also dangerous for Google. While 98% of Google’s revenue comes from ads as of 2008, the majority of its revenue stream is free of a great deal of risk from patent infringements. This is double true because the majority of Google’s patents are related to search and locating data. The products that it produces that people use on a regular basis have been designed around open standards which enables them to get around patenting and use licensing instead. If any of these technologies are accused of patent infringement Google can pull up the original source code, the version and the date. While this may be more expensive than the patent examiner finding this during the patent examining procedure, it still can save Google millions of dollars in patent suits. However, it hasn’t prevented them from having to pay a good deal in licensing fees despite this as I mentioned in my previous post.
Why is this a risk for Google? Well, every one of those patent lawsuits that were targeted at Motorola is now directly targeted at Google. Google is sitting on a huge pile of cash. Enough cash to outright buy Motorola. Additionally, any lawsuit that is directed towards an application of Android on a Motorola phone that Google will eventually be selling, is going to be directed towards Google now. Previously, when there was something infringing in an application on Android most of the risk was shifted towards the manufactures of the phones and away from Google. Google does have to pay Lodsys/Intellectual Ventrues for one of their patents which allows things to be purchased through apps. Like using the Android Market place. Google also has one other lawsuit related to Android at this point, which is related to a Java Patent. This is kind of an ongoing lawsuit, which Oracle has had to remove a blog post from a former Sun employee praising the use of Java in Android.
There’s got to be some sort of potential for payout for Google to take this risk though. Yes, I do think there is. Despite the fact that Google is going opening itself to direct lawsuit battles with Apple, it also allows its engineers another outlet for creativity now that Google has shuttered Google Labs. Engineers from the Motorola Mobile side will be able to have more freedom and the engineers that work in Google will be able to play more with Android to make a more superior product. Google will have direct control over their handset opposed to farming it out to HTC like they did with the Nexus One.
Are there any other risks besides the ones you’ve mentioned already? I think there’s one big one. Anti-trust case. Google is already in the cross eyes for an investigation. In my next blog I’ll discuss the case against Microsoft which the US and EU handled and then how the precedence could impact Google.