Lenovo has completed its $2.91 billion acquisition of Motorola Mobility, making the Chinese systems maker the world’s third-largest smartphone vendor and building on the promise of its officials to become a major player in all areas of computing.
Lenovo officials unveiled the closing of the deal Oct. 30, 10 months after announcing its intent to buy Motorola from Google and less than a month after completing its $2.1 billion acquisition of IBM’s x86 server business.
The two deals were similar as far as their impact on Lenovo, which already had sold its own line of x86 servers. However, the IBM deal propelled the company into the No. 3 slot of global server vendors, behind Hewlett-Packard and Dell. Now Lenovo, which already offered a portfolio of smartphones, has become a major player in the highly competitive smartphone space.
The company is hoping that the IBM and Motorola deals will follow a similar path to Lenovo’s $1.25 billion acquisition in 2005 of IBM’s PC business, which helped propel Lenovo past HP and Dell into the top spot among global PC vendors. The acquisitions are part of Lenovo’s larger PC Plus initiative to become a dominant player in computing areas beyond PCs.
“When we woke up today, our company was suddenly the world’s #3 smartphone maker,” Gavin O’Hara, Lenovo’s global publisher, said in a post on the company blog. “Lenovo’s brief but proud history in smartphones gets a massive boost from adding the well-established Moto and—most importantly—nearly 3,500 new colleagues around the world.”
With the deal, Lenovo is getting not only Motorola’s well-known brand, but also its lineup of smartphones, which includes the Moto X, Moto G, Moto E and Droid devices, and its future roadmap. It also gets the 3,500 employees—about 2,800 of whom are located in the United States. Lenovo will operate Motorola as a wholly owned subsidiary, whose headquarters will remain in Chicago, and Rick Osterloh will remain as president and COO.
Liu Jun, executive vice president and president of Lenovo’s Mobile Business Group, will be chairman of the Motorola Management Board, according to the company.
“By building a strong number three and a credible challenger to the top two in smartphones, we will give the market something it has needed: choice, competition and a new spark of innovation,” Lenovo Chairman and CEO Yang Yuanqing said in a statement.
Motorola was an early driver in the smartphone market, but over the years lost ground to Apple and Samsung. Google bought the company two years ago for $12.5 billion, and the search giant is taking a significant loss on it with the deal with Lenovo. At the time Google bought Motorola, Google CEO Larry Page said that it was “a great time to be in the mobile business, and I’m confident that the team at Motorola will be creating the next generation of mobile devices that will improve lives for years to come.”
Regarding the deal with Lenovo, Page said in a statement that “Motorola is in great hands with Lenovo, a company that’s all-in on making great devices.”
Lenovo Closes $2.91 Billion Deal for Motorola
Globally, vendors shipped 327.6 million smartphones in the third quarter, a 25.2 percent increase over the same period in 2013, IDC analysts said Oct. 29. Samsung and Apple were one and two in the market in the quarter, while Chinese device maker Xiaomi was third, according to the IDC numbers. Lenovo and LG Electronics essentially tied for fourth.
The analysts said that while developed markets saw single-digit growth, in emerging regions—where lower prices were making smartphones an affordable computing device—growth was hitting about 30 percent. According to Ramon Llamas, research manager with IDC’s Mobile Phone group, Xiaomi, Lenovo and LG all showed growth that was better than the overall market.
“This shows that there is still room to compete in this market, whether it be in the low end as Lenovo has done, at the high end where Xiaomi competes, or in both as LG Electronics has shown,” Llamas said in a statement. “Beyond the top five, there are a number of other vendors achieving similar results.”
Motorola CEO Osterloh said the deal will enable his company to take advantage of Lenovo’s worldwide reach and scale and its broad product portfolio.
“Over the past two years, we have transformed Motorola by focusing on what matters most—consumers,” Osterloh said in a post on the company blog. “We’ve made huge strides in bringing the mobile Internet to millions of people around the world and improving their lives through exceptional technology, experiences and value. While we’re proud of the progress we’ve made, we recognize that there is still much more we can achieve—in innovation, reach and impact.”