Lenovo has agreed to acquire Motorola Mobility from Google for $2.91 billion. The deal means Lenovo is well placed to become the main competitor to Samsung, as former rival HTC suffers from increased troubles. Motorola’s brand is a little dated in the UK, with their phones only stocked in a few stores, yet across the ocean in the USA and in Latin America it maintains a top 3 position in market share and sales.
Google purchased Motorola in May 2012 for $12.5 billion, but quickly spun off the television devices section of the company for $2.6 billion. While the difference between the sales price still represents a $7 billion loss, Google will be able to claim almost all of this back from tax deductions offsets from future profits.
Most analysts believed that Google’s purchase of Motorola was primarily defensive against the threat of patent lawsuits from rivals. Litigation is no stranger to the mobile phone world, and peaked at around the point of Google’s purchase. With the potential for Microsoft or Apple to gain massive payouts, or worse sales bans, against Android manufacturers, Google decided to step up to protect the Android ecosystem. By owning the Motorola patent portfolio it could counter-sue other companies that were almost all in breach of some of Motorola’s early patents, many of which cover the essentials of mobile telecommunications. The strategy appears to have worked, with a decrease in litigation in the industry – at least from the big players.
Now that things have calmed down Google had little use for Motorola. It was perhaps even a damaging asset for Google to own, with other Android manufacturers suspicious that Google might be awarding Motorola prior knowledge of Android updates. That Google would want to spin the company off in order to ensure that Android remains the dominant smartphone operating system with multiple manufacturers makes sense. And Lenovo is the obvious buyer, having largely failed to gain a foothold in smartphones by their own efforts yet having a brilliant position in the tablet and personal computer business. Lenovo has already successfully turned around ThinkPad after it purchased the business from IBM, and should be able to do the same with Motorola.
Motorola’s latest phones have already ensured that the phone manufacturer has a bright future. The Moto X might not have the best technical specifications out there, but the high level of personalisation possible due to the American based assembly and a website dedicated to allowing users to select their own phone design from thousands upon thousands of possibilities has meant the phone is a run away success in the States. It’s recently been announced that it will be making its way to the UK too, but it’s not yet clear if we will have the same personalisation options.
Motorola clearly has a positive future and that’s good for us as mobile phone users. Under Lenovo it should offer more competition to Samsung who have been dominating the market for the past few years. The increased competition should mean more innovation and a great selection of devices to suit all budgets.