by Brent Dirks
January 29, 2014
After buying struggling handset maker Motorola for $12.5 billion in 2011, Google has announced plans to sell the company to Lenovo for $2.91 billion. Google CEO Larry Page discusses the deal in a blog post:
But the smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices. It’s why we believe that Motorola will be better served by Lenovo—which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere. As a side note, this does not signal a larger shift for our other hardware efforts. The dynamics and maturity of the wearable and home markets, for example, are very different from that of the mobile industry. We’re excited by the opportunities to build amazing new products for users within these emerging ecosystems. Lenovo has the expertise and track record to scale Motorola into a major player within the Android ecosystem. They have a lot of experience in hardware, and they have global reach. In addition, Lenovo intends to keep Motorola’s distinct brand identity—just as they did when they acquired ThinkPad from IBM in 2005. Google will retain the vast majority of Motorola’s patents, which we will continue to use to defend the entire Android ecosystem.Before the deal is officially approved, both the U.S. and Chinese governments must give their blessings. And that’s not exactly a sure thing as the Chinese handset maker originally wanted to purchase BlackBerry before being shutdown by Canadian authorities. According to multiple reports, Google plans to keep a large majority of the patents acquired in its original deal. So the Apple competitor will get at least something for its almost $10 billion loss. While some believed the Google purchase would breathe life into the Android ecosystem, Motorola continued to struggle against Samsung and other competitors. The Motorola X, which was released right before the introduction of the iPhone 5s in September, was critically praised but didn’t sell like expected. So if the deal is approved, will Lenovo have what it takes to make Motorola relevant again? Lenovo worked wonders after purchasing IBM’s personal computer business in 2005. But as we know, the mobile industry is a very different animal.