Since 2012, Google still has not found the answer to Motorola’s inability to make profit!
Less than two years after multi-billion dollar search and technology solutions giant, Google announced it had acquired Motorola, both resurfaced in the news less than two days ago confirming that Google had sold, yes sold the mobility division of Motorola to computer manufacturer, Lenovo for $2.91 billion, consisting of $660 million in cash and $750 million in Lenovo shares, with the remaining $1.5 billion paid in the form of a three-year promissory note. Reuters reported on the deal.
While this deal would leave Google with around 5percent in the Chinese hardware maker Lenovo’s stakes, it is not what Google had in mind for Motorola, as its ‘transformation agenda’ was to keep the brand “Made in America”, coupled with Motorola’s trove of about 17,000 patents and hardware business, it presented the option (opportunity) to move its own branded devices against the likes of Apple, Nokia and BlackBerry. However, that move appeared to antagonize other makers of Android devices and the Google/Motorola relationship was anything but fruitful. In fact, the division lost $645m in the first nine months of last year. On the flip side, this purchase is the second in a line of multi-billion dollar acquisitions for Lenovo within one week! One that accelerates its move into western computer and handset markets.
The Chinese computer giant is the world’s biggest PC vendor, with about 17 percent share of the market, according to IDC. Last week it announced a $2.3bn purchase of IBM’s industry-standard server business, which makes low-margin computers based on the same technology underlying PCs.
The deal instantly made Lenovo a major player with PCs, building on the business-centric ThinkPad with the consumer-facing IdeaPad. Lenovo reportedly attempted to purchase BlackBerry, but a deal was supposedly squashed by regulators sensitive to a Chinese company owning phones widely used by government agencies.
[quote_box_center]Lenovo intends to keep Motorola’s distinct brand identity–just as they did when they acquired ThinkPad from IBM in 2005[/quote_box_center] “Lenovo intends to keep Motorola’s distinct brand identity–just as they did when they acquired ThinkPad from IBM in 2005,” Google CEO Larry Page said in a statement. As part of the sale, Lenovo will assume 2,000 patents, the two companies said. Google had already sold the TV set-top box business, called Motorola Home, for $2.6bn. In case you missed it, Google had acquired Motorola in May 2012 for $12.5bn at a time when a shortage in the amount of intellectual property left its Android mobile ecosystem vulnerable to legal attack. The deal marks one of the worst investments in Google’s history.
Going back to the era of the Moto Razr, it was such a hit, one can only wonder who did what wrong and how did Motorola manage to bring Google minus zero percent profit?
As regards plans for now and the future, Google looks like, beyond smartphones, it will be busy pushing its Google Glass headset and its Chromecast media dongle. It just purchased Nest for $3.2 billion to get into the smart thermostats and smoke detectors. Now that it has shed a business that has continually dragged down its profits, all eyes are on Lenovo to see what surprise the company can extract from Motorola; hopefully it’s not vice versa.
[quote_box_center]”The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones,” Lenovo CEO Yang Yuanqing said in a statement.[/quote_box_center]
Editor’s soliloquy: Just what if Lenovo is able to take Motorola out of murky waters and puts it on the world stage to compete with fire brands? Gobe for Google! Oh, and I wanted to title this; Google to Motorola: We’re through! Lenovo: Hey there sexy mama!