A Proxy War

First out of the Gate

With Nortel's auction barely over, Google and Apple are rumored to be circling InterDigital's IP assets in mobile handsets.

Second out of the Gate

Carl Icahn is pushing Motorola Mobility to monetize its own IP portfolio given the current hot market in smart phone. Specifically, he has valued Motorola's IP to be worth around $4bn. Given Nortel's final price of $4.5bn and the fact that Motorola invented the mobile phone industry, it does not seem like an aggressive number.

The Real Question

As strange as it seems to the casual observers, the real issue is the Google Android operating system for mobile handsets. It is the most viable alternative to iPhone today with shipped products. To use a cold war analogy, handset makers such as HTC of Taiwan and Samsung of Korea are the clients who have been fighting a proxy war for Google over their use of Android and Android's potential infringement of existing patents owned by the likes of Apple and Microsoft.

While HTC has been acquiring patents to counter the infringement claims and Samsung has been assiduously building up its own IP portfolio, as the keeper of Android, I cannot help but wonder how Google will shape the conversation. After all, it makes little sense for Google to let a global mobile computing eco-system that will be much bigger than the desktop computing one crumble over a few billion dollar worth of patents.

On this point, a chat between Google and Carl Icahn could be an interesting option.


* InterDigital: http://www.bloomberg.com/news/2011-07-20/google-said-to-be-among-companies-considering-interdigital-bid.html
* Motorola: http://www.reuters.com/article/2011/07/22/us-motorola-idUSTRE76K54220110722

A New Platform's Geometric Growth

G+

With a breath taking growth from less than a million users in July 2 to over 10 million users 10 days later, there have been stories about how male testosterone dominated the users base is at Google+.

(For the record, my Google+ account was given to me by a female friend which I signed up on July 8th.)

A New Platform

Many people have argued that G+ is a direct challenge to Facebook's social media throne. I would disagree. A frontal assault to unseat a dominant player who has over a quarter of the available users base, i.e. FB, is not a clear winning strategy even for a company like Google.

What seems likely is a hybrid model between FB's many-to-many conversations and Twitter's one-to-many broadcasts. This would be particularly interesting for enterprise users who may be looking for a platform that combines FB's community with Twitter's broadcast. And, given Google's dominance in consumer usage vis-a-vis its enterprise penetration, an enterprise focused push is more likely to "move the needle" as the saying goes.

For example, maybe G+ will have an enterprise version including LDAP, a common corporate directory service, integration. And, given Google's existing arsenal in the productivity tools and the ability to manage circles (think of it as managing collaboration projects), maybe the conversation about G+ will be more about its challenge to Microsoft in another year's time.

But, first thing first. Build the eco-system and the rest will follow.

* Too many men in G+: http://allthingsd.com/20110716/more-women-crashing-google-sausage-party/?mod=mailchimp
* Counting G+ Users: https://plus.google.com/117388252776312694644/posts/g9Xk6khUSs8

Cloud Computing's Reality

Good News

What is not to love about Cloud Computing? It minimizes time and cost of deployment and, usually, allows users better/varied method of getting their job done.

Faster, cheaper, and easier!

Bad News

But, there is no free lunch. The fact that basic functionality can be easily accommodated using Cloud-based applications, it does not mean that there will be no customizations required for specific usages, especially in the enterprise context. Similarly, integration with legacy systems, the tried and true source of income for any and all enterprise software companies, remains a question that people are still struggling with.

SDK/API and Standards

The ability to plan, create, and use SDK (software development kit) and API (application programming interface) will becoming increasingly important as enterprise players start to consider adding Cloud capabilities into their existing technology stack.

This also means that a new era of standard bickering is about to start.

Oh, joy!

* Changing the Way We Talk About the Cloud: http://knowledge.wpcarey.asu.edu/article.cfm?articleid=2012

Smartphones and Billion Dollar Auction

Rockstar's $4.5bn

Well, it is now official. Nortel's 6,000 patent portfolio has been sold to Rockstar, a bidding consortium consisting of Apple, Microsoft, Research in Motion, Sony, Ericsson, and EMC for $4.5bn. To put this in context, the starting stalking horse bid was $900mn from Google.

It is said that the winner companies were bidding mostly for defensive purpose against Google and its Android eco-system. The most obvious targets, beyond Google, would be Samsung and HTC. Words on the street is that there is regulatory concerns on the new IP owners could inhibit the competitive nature of smartphone developments.

The saga continues.

Alcatel-Lucent's $20+bn

With Nortel's auction done, inquiring minds cannot help but wonder what comparable could be drawn in the IP world. An investment banking analyst did some number crunching and suggested that Alctel-Lucent, who owns the IP portfolio of the old (AT&T) Bell Lab, could fetch more than $20 billion alone in a similar auction.

Contrasting with ALU's market cap these days at less than $20bn. I wonder if there may be an activist investor or two who are making plans as we speak.

At $15 per Smartphone

Valuing IP is a tricky business. And, the Nortel's auction, in no small part, is impacted by the recent explosive growth of smartphone eco-systems. To give it a more concrete context, MSFT is rumored to be asking for $15 licensing fee per phone that Samsung ships that uses Android. And, at 19mn phones for the last three months and continuing growth in the foreseeable future, this is real money that even MSFT cannot ignore.


* Nortel's $4.5bn: http://www.bloomberg.com/news/2011-07-01/nortel-sells-patent-portfolio-for-4-5-billion-to-group.html
* Bell Lab's $20bn: http://www.lightreading.com/document.asp?doc_id=209655&f_src=lightreading_gnews
* $15 per for MSFT: http://www.reuters.com/article/2011/07/06/us-samsung-microsoft-idUSTRE7651DB20110706