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

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

Google's sale of its Motorola unit to Lenovo less than two years after its May 2012 acquisition of the company gets Google out of the handset business so it can focus on Android and more.

In selling its Motorola Mobility unit to Lenovo in a $2.91 billion deal announced on Jan. 29, Google is making a move that helps firm up its direction, cut its losses and set itself on a path that will be much more lucrative and game-changing than scrapping with competitors in the wild world of handsets.

Those are the views of five mobile IT analysts who shared their insights into the latest Google bombshell in telephone interviews with eWEEK.

"It's something that was bound to happen—the question was when and who" would buy Motorola Mobility from Google, said Chris Silva of Gartner. "It's not surprising that it happened, and it's also not surprising that it's Lenovo. They needed a leg up so they could get on par with some of the other big hardware brands in smartphones."

The sale by Google also makes sense because from the outset of the Motorola Mobility acquisition back in May 2012, many industry pundits were perplexed by the purchase, since it put Google at odds with partners who were selling their own Android devices in competition with Motorola's offerings, said Silva. "It just didn't work."

In addition, the move makes sense for Google because the company's really not equipped to be in the low-cost commodity market that the smartphone market is becoming, he said. "Lenovo is going to be able to play a better low-cost smartphone game than Google was ever going to be able to do," said Silva. "These aren't Bentleys anymore. They're more like Honda Accords that we are buying as far as smartphones go today."

Chris Hazelton, an analyst with 451 Research, told eWEEK that the sale to Lenovo fits in with a flurry of other recent news announcements by the two companies in recent weeks. On Jan. 28, Lenovo unveiled a major restructuring, with the company dividing itself into four business groups—PCs, mobile, the cloud and enterprise. On Jan. 27, Google announced a 10-year patent licensing agreement with handset maker Samsung, while on Jan. 23 Lenovo unveiled its plans to buy IBM's x86 low-end server unit for $2.3 billion. And on Jan. 13, Google unveiled its plans to purchase connected home vendor Nest in a $3.2 billion deal that will help Google push deeper into the lives of consumers.

To Silva, the Motorola Mobility sale makes perfect sense as Google appears to be moving itself away from smartphones and into the direction of the Internet of things, such as the interconnections of vehicles, wearable computers such as Google Glass and in-home technologies.

"The ingredients are there," he said. "They have the patents, and they've directed the Android ecosystem. The next area of focus will be the Internet of things. They'll be putting together all of the Android devices out there and connecting them to Nest [products in people's homes]. They have the house, they have the car. They don't need the smartphone because they have the applications and the operating system."

Maribel Lopez, principal analyst with Lopez Research, said the sale to Lenovo is the right course for Google. "Frankly, I'm shocked that they didn't do it shortly after they bought the whole thing. They're not a hardware company," she said of Google. "I never thought they were going to be in the hardware business. I thought they'd keep it long enough to prove they didn't just buy it for the patents [received from Motorola in the acquisition by Google] and then spin it off."

Dan Maycock, an analyst with OneAccord Digital, said those Motorola patents, which Google valued at some $5.5 billion when it acquired the company, will still be valuable to Google even after the sale of the unit to Lenovo. The company has already announced that the majority of those patents will remain with Google.



 
 
 
 
 
 
 
 
 
 
 
 
 

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