Google's sale of Motorola: Good housekeeping - Mobile World Live

Google’s sale of Motorola: Good housekeeping

30 JAN 2014

NEW BLOG: Google’s decision to offload its loss-making Motorola Mobility devices unit to Lenovo seems like a sensible way for the company to tidy up its mobile activities, in a week that has also seen its relationship with Samsung improve.

In terms of cold, hard facts, Motorola as a devices business has failed to impress. Under Google’s steerage, it has reported loss after loss, and its market share means it is generally lumped in with the “others” category.

And its presence has shrunk to the point where it is effectively an Americas-only concern which, while playing well in Google’s own backyard, has meant that it has not posed a threat to other device makers in the Android space globally.

Indeed, in some cases it looked as if Google was so keen not to favour the business, it ended up as the poor relation. It has not been part of the Nexus device supplier portfolio for some time, for example, and it has not offered Google Play editions of its smartphones.

But as long as it remained a subsidiary of Google, there was the possibility it could be a threat. A change of heart at the top, and Motorola could have been transformed into an aggressive loss-leader, undercutting its rivals while Google made its cash through advertising and Android apps and content sales.

There was, indeed, the odd sign of disruption. Take its Moto G, for example: the idea here being that it is possible to offer a low-cost device that does not skimp in terms of specifications, and at launch Samsung was in the firing line.

With Samsung accounting for 32 per cent of the smartphone market in Q4 2013, according to Strategy Analytics figures, and the South Korean company’s portfolio being dominated by Android, it makes sense for Google to want to keep its partner close, rather than risk irking it for a short-term gain.

Earlier this week, the companies announced a patent licensing agreement, but the statement announcing it read more like a strategic alliance deal – plenty of talk of a “mutually beneficial agreement”, a “long-term cooperative partnership”, and of “paving the way for deeper collaboration on research and development of current and future products and technologies”.

And Google is obviously aware that with its role in the creation of the Tizen operating system, Samsung is putting in place a “plan b” – whether its long-term plan is to go with it wholeheartedly or not.

Certainly Samsung’s level of commitment to Tizen so far is open to question, and promised launches have been pushed-back. But as long as it remains in the pipeline, Samsung does have something it can use as leverage over Google, and a threat to migrate to the platform in the long term would certainly raise eyebrows.

There is, of course, much speculation that a Tizen device will be unveiled at Mobile World Congress next month, and certainly it would be somewhat embarrassing for Samsung if after their years of work and promotion, nothing comes of the project. But a low-key launch of a smartphone that receives limited support could be a good face-saving option, with the benefit that if it is well regarded, the door is not closed for future products.

What will be interesting to see is how much of Motorola Mobility survives under the steerage of Lenovo.

The Chinese company has been growing quickly off its own bat, and its existing Android device portfolio is quite solid – this aspect of the business is not where it is facing its challenges. Growing its presence internationally is key to boosting its market share and generating scale.

Certainly the Motorola brand still has value in the Americas, and possibly even in Europe as well, and it may indeed prove sensible to look to build on this, rather than for Lenovo to build its own-brand presence in the mobile market.

And at least in the medium term it should benefit from a closer working relationship with Google, which will certainly work in its favour.

But there will be many areas of overlap between the two and, with Google having already slimmed down a Motorola that was already contracting when it was bought, the US-based company is already a shadow of its former self.

While in a statement, Lenovo said it is acquiring an “incredibly talented global team”, it is certainly likely to find a fair amount of cross-over between the two. And while it has acquired Motorola’s “future product roadmap”, it is unlikely to want to support two different product organisations moving forward.

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

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Steve Costello

Steve works across all of Mobile World Live’s channels and played a lead role in the launch and ongoing success of our apps and devices services. He has been a journalist...More

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