When Google bought Motorola initially in 2011 for $12.5 billion it was apparently only for Motorola’s impressive list of patents. Now that the search giant has sold the resurgent Motorola, for a huge loss, it’s time to examine whether the two companies’ time together benefited one or the other, or both.
The first thing worth noting is that Google is making a massive loss on the sale, considering Lenovo only paid $2.9 billion to take over Motorola. According to Google’s official announcement of the sale:
“Lenovo (HKSE: 992) (ADR: LNVGY) and Google (NASDAQ: GOOG) today have entered into a definitive agreement under which Lenovo plans to acquire the Motorola Mobility smartphone business. With a strong PC business and a fast-growing smartphone business, this agreement will significantly strengthen Lenovo’s position in the smartphone market. In addition, Lenovo will gain a strong market presence in North America and Latin America, as well as a foothold in Western Europe, to complement its strong, fast-growing smartphone business in emerging markets around the world.
The purchase price is approximately US$2.91 billion (subject to certain adjustments), including US$1.41 billion paid at close, comprised of US$660 million in cash and US$750 million in Lenovo ordinary shares (subject to a share cap/floor). The remaining US$1.5 billion will be paid in the form of a three-year promissory note.”
It seems as if Lenovo, with an already significant presence across the globe, albeit in the personal computing market, is ready to expand into the mobile world.
Lenovo’s crowning achievement in recent years has been their very well known ThinkPad‘s success. This infrastructure and brand trust from consumers is sure to benefit its new mobile focus, via the reputable Motorola. Motorola went off the boil for a few years, but with the Moto X and the budget Moto G the company saw much improved success in the mobile market in 2013.
To me the most interesting part of this deal is that Motorola has been an exclusive of the USA for the recent past, while Lenovo has enjoyed a worldwide presence. Could this be the start of Motorola and Lenovo’s quest to get their products into the hands of users across the globe? I also have a feeling this might be one of the tech stories to keep an eye on over the next 24 months, not just because of the amount of money exchanged, but because of the possibilities the partnership opens up to tech-enthusiasts across the developing world.