Google's Sale of Motorola Mobility to Lenovo Is Right Move: Analysts

By Todd R. Weiss  |  Posted 2014-01-30 Print this article Print

"They're keeping something they needed when it comes to patents," said Maycock. "I don't think they're going to leave empty-handed here, and that's really why they bought the company" in the first place. "Since Google acquired Motorola, they have built some great handsets, and now they're sending them off to the next guy. I think they got out of it what they wanted."

Another analyst, Jack Gold of J. Gold Associates, said that in addition to those desired patents, Google also got Motorola's smartphone expertise when it originally bought the company. But that wasn't enough to keep Google in the smartphone business for the long term, he said. "I never saw Google being a vertically integrated, womb-to-tomb hardware provider, unlike Apple, which has the full stack."

Google couldn't play in that game with Android, said Gold, because of the uncomfortable position it was in as a competitor to its Android partner vendors. "That's never a good position to be in," he said. "With the sale of Motorola Mobility, now it is clean with no conflicts. It served its purpose. It's time to get rid of it."

For Lenovo, the deal is also a smart one, he said. "Lenovo gets to buy into a major brand with still substantial channels outside of Lenovo's primary mobile presence in China. And it gets an engineering staff that knows phones for worldwide sales. This is a win for Google and a win for Lenovo in my opinion."

Gold called the $2.91 billion price tag for Motorola Mobility a relative bargain for Lenovo. "Lenovo is amassing its acquisitions to be a full line player, and it has Hewlett-Packard—and to a lesser extent Dell—directly in its sights. IBM could be next. I don't think Lenovo is done yet with acquiring markets and market share companies. And it's making them a worldwide player ahead of its local competitors such as Huawei, ZTE and Xoambi."

The sale of Motorola Mobility was unveiled in a Jan. 29 post from Google CEO Larry Page on the Google Official Blog as "an important move for Android users everywhere" because it will help advance the brand and its devices. By selling the company, Motorola Mobility's handset business will now be propelled by Lenovo, which already has a thriving handset business, rather than operating as a side business in the shadow of other work being done by Google, wrote Page.

"This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere," wrote Page. "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 lots of experience in hardware, as well as a global reach, which are both needed in the handset arena, wrote Page. "In addition, Lenovo intends to keep Motorola's distinct brand identity—just as they did when they acquired ThinkPad from IBM in 2005."

Google had already begun selling off parts of Motorola Mobility within months after it acquired the company. In December 2012, seven months after the original purchase, Google sold off the Motorola Mobility Home unit for $2.35 billion, according to an earlier eWEEK report. The Motorola Home division, which was acquired in the deal by Arris, sold set-top boxes for consumer cable television services.

Google had put the Motorola Home unit up for sale in late August 2012, just a few weeks after it announced the layoffs of about 4,000 workers there, which was about 20 percent of the workforce. The job cuts came along with the closing of 30 of Motorola's 90 facilities around the world and were unveiled just three months after Google acquired the company.


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