In a move that has taken many by surprise, Chinese PC maker Lenovo has bought Motorola Mobility from Google for $2.91 billion.
The American mobile phone manufacturer had only been part of the Google family since May 2012, but now it’s been passed on to a company with major plans for the smartphone space.
Lenovo may be the biggest PC manufacturer in the world, but it only has a smartphone presence in its native China. With the purchase of Motorola, it has instantly acquired a foothold in the American market.
Google, for its part, has precisely what it came for. As Google CEO Larry Page explains in an official blog post: “We acquired Motorola in 2012 to help supercharge the Android ecosystem by creating a stronger patent portfolio for Google and great smartphones for users.”
Put simply, it was never really about the hardware. Google mainly wanted Motorola for its vast library of patents, which could be used to help protect itself and its Android partners (such as Samsung) from the ever-litigious Apple.
Motorola’s patents have helped create a level playing field, which is good news for all Android’s users and partners,” said Page. He later added that “Google will retain the vast majority of Motorola’s patents, which we will continue to use to defend the entire Android ecosystem.”
That Motorola happened to create two fantastic, high-value smartphones (the Moto G and Moto X) during its time under Google’s wing was just an added bonus. Indeed, with Motorola making losses last quarter of $248 million, the value of this bonus was dubious.
Google wasn’t extracting as much value out of its new patent portfolio as it expected – at least not enough to offset the cost of an unprofitable handset arm. Lenovo has promised to restore Motorola Mobility to profit, and to challenge to the top dogs over the coming years – something Google accepts it can’t offer.
“The smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices,” explained Page. “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.”
For those worrying that this means the end of the famous Motorola brand, fear not. “Lenovo intends to keep Motorola’s distinct brand identity—just as they did when they acquired ThinkPad from IBM in 2005,” said Page.
Interestingly, Page noted that this move said nothing about its intentions in other hardware markets, such as wearable and home tech.
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