News came this morning that Google is acquiring Motorola Mobility for a hefty $12.5 billion. Motorola Mobility which focuses its efforts on mobile phones and tablet computers is a spin off from Motorola. Here is the story from Bloomberg:

Google Inc. (GOOG), maker of the Android mobile-phone software, agreed to buy smartphone maker Motorola Mobility Holdings Inc. for $12.5 billion in its biggest deal, gaining mobile patents and expanding in the hardware business.

Motorola shareholders will get $40 a share in cash, the companies said in a statement today. That’s 63 percent more than Motorola Mobility’s closing price on the New York Stock Exchange on Aug. 12. Both boards have approved the takeover.

If this is not about patents(which it most likely is), then it is a completely crazy move on the part of Google. What kind of message does it send to other Android handset makers?

This also shows how well Microsoft has played its hands with their new Windows Phone platform. Analysts and pundits forecasted (and even pressured) a possible Nokia acquisition by Microsoft. Microsoft instead got what it wanted without an outright acquisition of Nokia – an exclusive Windows Phone deal. I have to say that this move by Google has increased the attractiveness of the WP7 platform to handset vendors.

Now, back to the topic of patents – Google’s Android ecosystem was under relentless attack from competitors – not by outsmarting and out-innovating Android, but suing them for patent infringements. Also Android rivals colluded in order to exclude Google and Android from getting their hands on Nortel’s portfolio of patents. Microsoft, arguably, has been making more money from Android than Google itself. Apple was successful in blocking Samsung’s tablet from sold in the European markets. Something is badly broken in the patent system.

These companies are spending money on lawyers and lawsuits instead of spending it on engineers and technology. One has to really question the utility of the patent system itself. All these companies are clearly in violation of each other’s patents, and they use their own patent portfolio as a deterrent(nuclear style) against potential lawsuits. The biggest loser in this system is innovation. Does a new upstart, without the protective shield of a large portfolio of patents, stand a chance against these behemoths? What usually happens is startups are ignored until it achieves a level of success where patent trolling becomes a lucrative strategy.

This blog post from the maverick,Mark Cuban, deserves a more serious consideration. At the very least, I think it is time to rethink the patent system.

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Couple of days ago, on my Facebook wall, I said the following in response to a friend when he posted a link to Google’s + announcement:

‎Ruben, it is very interesting. I read that elsewhere this morning. Facebook is too entrenched to be dislodged easily, but a little more competition is always helpful. I am pretty sure skype is coming to facebook.

if it feels like something people really like, facebook can respond very quickly.

That was precient, here is why:

Earlier this week while visiting Seattle, Facebook CEO Mark Zuckerberg tipped off Seattle press that the company would be launching an “awesome” new product next week that has been built by Facebook’s Seattle team.

The product has been built on Skype and will include a desktop component. It’s not clear to me whether that means it will just work if a user has Skype already installed on the computer, or if additional software will need to be downloaded even if the user already uses Skype. But it’s clear that there’s very deep integration between the products, and from the user’s perspective, the product will be an in browser experience.

I think I should apply for a psychic license. What do you say?

Momentum in business, and in life, is like a spiral – when you are on the way up, it seems like nothing could ever stop you, and on the way down, it’s feels the same way. Something very often comes in the way to stop you in your tracks, sometimes soon, and other times late. The one who could do no wrong on the way up, can not get anything right on the way down, and vice versa! To put it in the context of a business, when stock price starts stagnating for some inexplicable reason, suddenly employee retention becomes a problem, and spiral suddenly changes direction 180 degrees.

It would be fun riding on that upward spiral, I imagine; an end to that run would be the last thing on that fortunate person’s mind – almost impossible if he/she cared to think about it. On the other hand, riding a downward spiral would be no fun at all, and, I would argue, that a desperate hope for its end would be that unfortunate person’s obsession. Often, they are not two different persons but the same one at different periods in life.

I’ve been reading a lot of Taleb and wondering about those spirals of life. With a few more stats courses under my belt, I have better appreciation for Nassim Taleb’s work – Fooled by Randomness. Yes, I am reading it a second time, after a long hiatus.

If there is one thing to take away from Taleb’s work, it is to stop pretending to be privy to any such special knowledge of the future, such as when the stars will align in your favor and when they will not.

Barnes & Noble has been in the news lately because of the buyout offer from John Malone circling around. Within few days of John Malone’s offer, Ron Burkle, a major shareholder in BN announced that he grabbed another 603,000 shares of BN at $18.49, a price that already reflects the price surge after the Malone offer. So why should Microsoft enter the bidding war?

1. Barnes & Noble has over 700 stores worldwide and over 600 college bookstores. These books stores are a great showroom for Microsoft’s array of software, gaming & partner made hardware products. Some of these stores may not be ideally located for Microsoft’s store strategy, and in those cases, Microsoft should just sell the location. Large stores, especially in upscale downtown locations or inside major shopping malls should be attractive to Microsoft.

2. Barnes & Noble, just yesterday, announced the new Nook ebook reader. As stated earlier, it is very promising new product. Even the “older” color screen version of the nook has been a hit product. Granted, the color nook runs Android. It’ll not be hard for Microsoft ride the success of nook while preparing to transition the product to something that runs a version of Windows CE kernel.

3. Barnes & Noble sells traditional paper books and, increasingly, the electronic version. Microsoft as a technology company is investing heavily in its online division to compete with Google. This is another way for Microsoft to ensure that they make their presence felt not just in search and related services, but creating valuable information content in its cloud services.