Lenovo buys into the US Smartphone Market

Lenovo purchases Motorola Mobility from Google for $2.9B

levonovo moto 5

On 29.01.2014 the Internet was abuzz over Google’s announcement that it had sold Motorola Mobility to Chinese-based Lenovo for $2.9B.  The news is significant because Google has only held Motorola Mobility for 19 months; and it’s selling the manufacturing business to Lenovo at a $9.5B loss.  That’s enough to give any stockholder the willies.

I’ve seen a number of reports that differ on how long Google held the property.  Some say August of 2011. Some say May of 2012. The key point is that Google didn’t have Motorola for long; and honestly, Google didn’t buy them for the manufacturing business.  They never used Motorola to produce a Nexus branded smartphone.  All they were really interested in was their patents.

This is further supported by the fact that Google is retaining most of those patents. While the sale includes a license to most/all of those patents to Lenovo, they will also receive a number of patents, the Motorola Mobility brand and their trademark portfolio.  It also provides Google with some relief – Motorola Mobility’s hardware division has been struggling for quite some time.  And besides… Lenovo has been frantically searching for a way to enter the lucrative North and South American smartphone markets.  Now, it appears, they have a way to do that.

Hopefully, Lenovo will be able to do something more with Motorola Mobility than Google did.  Google really let them sit there and collect dust. They never really went all in; and since being acquired by Google, Motorola – who recently produced both the Moto G and Moto X Android smartphones – was never profitable, operating at a $192M loss last year and a $248M loss in the third quarter of 2013 alone.

Lenovo on the other hand has a decent track record for turning businesses around. In 2005, it bought IBM’s PC business for $1.25B. It’s made steady strides in that arena; and last year over took HP as the world’s largest PC manufacturer. It’s also done a great deal of work to build and expand the ThinkPad line’s perception of value and quality.

Acquiring Motorola Mobility will make Lenovo the third largest smartphone manufacturer in the world, behind Samsung and Apple, respectively.  With only two possible mobile OS’ to choose from – Android and Windows Phone, as Apple doesn’t license any of its operating systems to 3rd parties – Lenovo can capitalize on Android’s vast popularity and Blackberry’s waning market share.

That last bit is important.

Many feel that with the rapid decline and documented demise of Blackberry, Windows Phone, with Exchange ActiveSync’s solid, well positioned Push system, is becoming the enterprise-messaging platform of choice.  If that ends up being accurate and true, then a deeper partnership with Microsoft may really help Lenovo cement itself as an enterprise equipment supplier in the coming months and years.

Unified communications is something that Microsoft has been trying to get together for a number of years. Their MOC (Microsoft Office Communicator) application handles enterprise-level instant messaging via Exchange. If they can pair that with a secure, enterprise mobile messaging offering via Windows Phone, not only would it help them get back to relevance, but also it would make Lenovo’s goal of getting a foothold in the North American smartphone market possible.

What do you think about Google’s sale of Motorola Mobility to Lenovo?  Is this a good move? Did Google really just act as a protracted patent troll? Is Motorola Mobility worth saving? Why not give us your thoughts in the discussion area below and let us know what you think?

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