Whether this is the reality or not, Google seems to think it’s happening. When bankrupt Nortel decided to sell its approximately 6,000 patents and patent applications covering a broad range of wired, wireless and digital communication technologies back in April, the plan was to offer a stalking horse deal to Google for a cash purchase price of $900 million. The intention with this was to place a starting value on the patents for inclusion in a public auction with Google in position to bid on the final package.
What happened was that bidding finally raised the price to $4.5 billion! These 6,000 patents seemingly cover the entire spectrum of mobile computing and telecommunications which would put any buyer at the helm of the technology industry. This “buyer” ended up being a consortium of tech companies that banded together in order to share the patents, thus eliminating possible costly licensing fees. This consortium is comprised of Microsoft, Apple, Ericsson, EMC, Sony and RIM. Originally, Google was invited by Microsoft to be a part of it as well, but Google declined.
Adding into that mix, another set of tech patents, this time from Novell was cleared for sale to a slightly different group of companies: Microsoft, Oracle Inc., Apple and EMC Corp. This sale contained 882 patents. All of these patents were also made available to Google at some point in the last 2 months, but Google again declined to be a part of it.
As a result, Google is now claiming that Microsoft and Apple have teamed up together in an effort to bring down the Android market. The way this works is if Google is making phones that use technologies covered by any of the aforementioned patents, they would be subjected to licensing fees controlled by Microsoft, Apple and the rest of the bunch. Google claims that this would give their competitors an unfair advantage in the smartphone arena.
While this is very true, can Google really complain? Considering they had the chance to partake in these deals and the fact that Microsoft invited them to be part of the consortium, I can’t really say I side with Google on this! However, Google is already paying Microsoft licensing fees on Android phones for patents they own, so it’s very possible that Microsoft would use this as a way to bring down Android. In fact, Microsoft just recently asked Samsung to fork over $15 per Android phone they make—presumably due to the fact that Samsung also makes Windows Phone and Microsoft probably wishes they didn’t deal with Android.
It’s estimated that there are some 250,000 patents involved in making an average smartphone so it seems no matter who owns what patents, the only real losers in this case will be the customers. Afterall, we’re the ones having to pay upwards of $600 to own the latest tech gear. This price of course is not including any subsidized cost of buying a phone with a contract. One possibility for lowering prices would be the ownership of a majority of patents that go into making a smartphone. In a perfect world, there’d be no licensing fees and the phones could become dirt cheap.