Motorola has made it clear yesterday that they plan on collecting patent royalties from other Android manufacturers. Here’s Sanjay Jha’s quote (Motorola CEO):
“I would bring up IP as a very important for differentiation (among Android vendors). We have a very large IP portfolio, and I think in the long term, as things settle down, you will see a meaningful difference in positions of many different Android players. Both, in terms of avoidance of royalties, as well as potentially being able to collect royalties. And that will make a big difference to people who have very strong IP positions.”
So why is Motorola doing this now? I think there are 3 main reasons for this:
This is the most obvious one. They want to go after others with their IP portfolio because it’s another way to make money. They’ve seen how the value of patents has gone up dramatically lately, and they want a piece of it. Motorola hasn’t been doing that great lately with their profit, and they are probably getting a bit desperate right now, so they are willing to do anything to get a bit of extra money, even if that means biting the hand that has fed them and took them out of bankruptcy.
If they can sell a phone for $200, and their competition has to sell it for $220, even though they have identical specs, that’s a win for Motorola. So not only will they be making more money from the other Android manufacturers, but they will also hurt them by making their products more expensive compared to theirs. The difference might not be that big, and it might only be a few dollars per handset, but from their point of view every little bit counts. It’s especially damaging to manufacturers that don’t have that many patents in their portfolio, and have to pay other patent holders as well.
It has become obvious over the past few days that Motorola is in talks with Microsoft about using WP7. They’ve said before they don’t care about using WP7, and soon after that Microsoft sued them, most likely to force their hand to sell WP7 devices. Motorola said a few days ago that they are willing to use WP7 as long as Microsoft gives them the same deal they made with Nokia. Microsoft might agree to a similar deal if Motorola is also willing to cause some trouble for other Android manufacturers, and make Android more expensive for them, which is exactly what Microsoft has been trying to do for a while now.
They seem to mix like oil and water lately, which means they really don’t. For all their missteps lately, Motorola has lost a lot of good will from the press, but also from their fans. The bootlocker issue, the Xoom pricing fiasco, Blur – they all add up. Right now Motorola is trying to give a blow to the manufacturers that some Android users love right now, but you never know if next time they want to buy an Android phone, they might go for a Motorola one. But the thing about Android fans, especially the most passionate ones, is that they buy their phones not just because they like the phones per se, but because they also like the companies they buy them from.
If Motorola is acting so aggressively not only towards the other companies they like now, but also towards the Android ecosystem itself – will they still like them later, or will they start boycotting their products, because they’re kicking Android while its down – which in this case means, they are going to collect patent fees from other Android manufacturers just when everyone else seems to be doing the same, and it could lead to Android becoming less popular with some manufacturers.
If that happens, I think Motorola will be remembered as one of the companies that went against Android, together with Oracle, Apple and Microsoft. Do they really need that right now? Sure, the IP licenses might give them some extra money, but what happens if people start boycotting their products, and their sales start dropping fast? Motorola should do a bit of long term thinking here, and try to get back some good will from the Android community. Trying to squeeze money from the other Android manufacturers, just when others are trying to do the same, is definitely not the way to do that.