Google to offload Motorola Mobility to Lenovo

Google to offload Motorola Mobility to Lenovo

30 JAN 2014

Google announced a deal to sell its Motorola Mobility unit to fast-rising Chinese player Lenovo for $2.91 billion, following its acquisition of the troubled handset maker in 2012.

Lenovo said the deal will give it a “strong market presence in North America and Latin America”, as well as a “foothold” in Western Europe, to complement its own smartphone business in emerging markets worldwide.

The Chinese company is acquiring the Motorola brand, the US company’s existing products including Moto G, Moto X and Droid Ultra, and the future Motorola Mobility product roadmap.

According to research firm Strategy Analytics, the combined Lenovo/Motorola will have a smartphone market share of 6 per cent, putting it in third place – but well behind rivals Samsung (32 per cent) and Apple (15 per cent).

On its own, Lenovo captured fifth pace, with less than one point separating it from third-placed Huawei and fourth-placed LG.

While Lenovo’s own success has been built on its efforts in China and in emerging markets, in recent years Motorola has seen its operations shrink to become Americas-centric.

In a blog post, Larry Page, CEO of Google, said: “The smartphone market is super-competitive, and to thrive it helps to be all-in when it comes to making mobile devices. It’s why we believe that Motorola will be better served by Lenovo – which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world.”

Google will retain ownership of the “vast majority” of the Motorola patent portfolio, with Lenovo receiving a licence to this. According to reports, it will also hold on to Motorola’s Advanced Research Group.

Google acquired Motorola Mobility in May 2012 for $12.5 billion, and in the meantime has seen a continuing run of operating losses for the business.

The $12.5 billion figure, however, included around $3 billion in cash held by Motorola, $1 billion of tax credits, and in the meantime it has sold Motorola’s home business to Arris group for around $2.35 billion.

Taking out the $2.91 billion proposed by the Lenovo deal, this means that Google paid around $3.2 billion for Motorola’s patents and Advanced Research unit – below the $4.5 billion paid by the Rockstar consortium for Nortel’s intellectual property.

But the value of both the Rockstar and Motorola patents have been questioned in recent months.

In Google’s case, FOSS Patents said that with no injunctions in place worldwide against Apple or Microsoft, “the Motorola Mobility deal has not been able to bring patent peace”.

And Google’s activities with regards to FRAND patents has brought it under the scrutiny of regulators.

Lenovo has previously been linked with an acquisition of BlackBerry and tie-ups with NEC and HTC – none of which came to fruition.

The deal is subject to regulatory approvals and other closing conditions.


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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