By Gadjo Cardenas Sevilla
In an unprecedented move, Apple, Microsoft, Sony, Ericsson and EMC last week formed a strategic partnership to bid for 6,000 Nortel Networks patents worth $4.5 Billion.
The Nortel patents, which are valuable for their relevance to wireless, mobile and telephony as well as data networks will add a lot of leverage to the new owners, specially against competitors who may be using or employing such technologies in the present and more importantly in future technology and products.
Google Inc. wanted the patents badly for its Android OS handset strategy and even put in the opening bid of $900 million. Many were surprised when cash-rich Google failed to counter the offer made by the Apple-led consortium. This may neutralize Google’s position in the mobile space. While Google is one of the fastest growing mobile OS providers and sells millions of handsets made by other manufacturers, it is relatively new in mobile and may not have a stockpile of patents for all the technology it is using.
Nortel Networks was one of the biggest and most successful Canadian technology and telecom companies that went head to head with Cisco, Avaya and similar companies in the enterprise and data infrastructure space. Nortel filed for bankruptcy protection in 2009 after a the toll of 10-year business decline capped off by the 2007 credit crunch and recession. The sale of its patents is a last resort to pay back some of its debt.
Analysts see the consortium and patent buy as a strategic alliance to stonewall Google Inc. in the smartphone space. It is a lot like an arms race right now in the mobile space and the patents serve as ammunition for future litigation. Companies like Apple, RIM and Ericsson owning the rights to Nortel’s vast collection of patents stockpiled through years of research and development gives them a substantial leverage over competition.
For RIM, their involvement in the consortium guarantees that some of this Canadian-developed technology stays with a Canadian company and could aid RIM in its future technology plans.
“The size and dollar value for this transaction is unprecedented, as was the significant interest in the portfolio among major companies around the world,” George Riedel, chief strategy officer and president of business units at Nortel, said in a statement.
The sale is subject to Canadian and U.S. court approvals which will be sought at a joint hearing expected to be held on July 11, 2011, Nortel said.
