In 2012, Google bought Motorola Mobility for 12.5 billion dollars. Many people were confused by this move. Why would Google buy a company that competed with all other Android manufacturers? Many thought that Motorola would become the “favorite child” of Google and receive more benefits than other Android manufacturers like Samsung and HTC. This would create friction between Google and the other competing Android companies. Technology news site Extremetech.com reports that the fears of Motorola receiving unfair benefits or Google closing off Android exclusively to Motorola were legitimate enough for Samsung to create a second “backup” operating system, the Tizen. Soon after Google acquired Motorola, Motorola released an extremely customizable device, the Moto X. The Moto X was the first device considered to be a collaboration between Google and Motorola and did stellar in the initial sales. According to Unwiredreview.com, the Moto X sold 500,000 units on only two initial carriers, Verizon and AT&T, within only 5 weeks left of the quarter. That would equate to about 1.4 million units if sold on a full quarter of sales. At that time, the collaboration between Google and Motorola seemed promising. Fast forward to 2014, Verge.com broke the news that Google has now sold Motorola to the Chinese personal computer (PC) maker Lenovo for a mere 2.91 billion dollars. Only 2.91 billion? After buying Motorola two years prior, Google sold the company for only one fourth the price it was bought at.Despite its seeming lack of logic, the deal does make sense for all three players: Google, Motorola, and Lenovo. Google’s goal is to diversify the Android ecosystem as much as possible. Therefore, selling Motorola to Lenovo is extremely smart and calculated.
When Google acquired Motorola, it also acquired Motorola’s patent portfolio. The Quartz Blog, qz.com, estimates that this portfolio contains roughly 15,000 patents that Google could potentially use to protect the Android ecosystem from other companies, specifically Apple. The patent portfolio was not included in the sale of Motorola to Lenovo, indicating that Google was not yet done with Motorola. Google had reaped the deal’s benefits. The company kept the patents it needed, and sold off the rest of Motorola.
On the other side of the table, this is a great deal for Lenovo. When people in America think of Lenovo, they think of PCs like the Lenovo Touchpad, rather than the company’s smartphones. Internationally, however, Lenovo is a major smartphone competitor, placing 5th in smartphones shipped in the 4th quarter of sales in 2013.
Right now, the PC market is not exactly booming, so buying Motorola will help Lenovo gain influence in the smartphone game in America. Lenovo will not have to worry building technology from scratch because it will still have all the Motorola hardware designs and other Motorola resources to its advantage. Most importantly, Lenovo will be able to take advantage of Motorola’s relationship with major cellular carriers like Verizon, T-Mobile, AT&T, and many others.
If Lenovo acts smartly, it will not tamper with the Motorola branding, at least not now. Lenovo should work behind the scenes with Motorola, but keep the Motorola name at the front of its devices. The average consumers are often unaware of acquisitions like these, so by working behind the scenes, Lenovo will be able to reap the rewards without having consumers question their devices and saying, “What’s a Lenovo smartphone? I have never heard of that.”
Lenovo will hopefully combine its resources and Motorola’s to take some of the power away from the extremely dominant Samsung. Consumers can look forward to a surge of successful Motorola devices in the coming months and years and see what Lenovo really has in store for Motorola. Will this move be successful and diversify the Android ecosystem or will we see Motorola shipped around major companies again? Only time will tell.
Written by TYLER DOAN