Lenovo Buys Motorola from Google for US$ 2.91 Billion
Ownership of Motorola (NYSE:MSI) is about to change hands again. This time, the Chinese PC manufacturer, Lenovo, bought the mobile maker for a reported tag price of US$ 2.91 billion from Google Inc (NASDAQ:GOOG). Google happens to buy Motorola just in 2012, for almost tenfold US$ 12.5 billion.
To the naked eye it may seem like a huge loss to Google. However, Google’s Chief Executive Officer and co-founder, Larry Page, mentioned in Google’s official blog that it will retain the majority of the Motorola’s portfolio of patents, which is by any means a vast asset pool. In the blog, Larry Page openly confirms that the idea behind buying Motorola was to get its hands on the patents that will help build the Android ecosystem. We acquired Motorola in 2012 to help supercharge the Android ecosystem by creating a stronger patent portfolio for Google and great smartphones for users” says Larry Page. “But 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” He added.
To the average Joe, the move seems like a win-win for both Google and Lenovo. Google got the cream from buying Motorola as it was after the intellectual property. On the other hand Lenovo, a few years later, got the hold of a ready Mobile manufacturer to fuel its growing mobile device business.
For Google, it will be like letting a cash cow go, that died! Operating Motorola at a loss is one of the reasons Google ultimately had to let go of this American brand. After the mobile world moved towards Smartphones, Motorola saw the loss of its market share back in 2009, and its operating revenue fell from above US$ 5 billion per quarter to less than US$ 2 billion by first quarter of 2010. Since then, Google also launched the successful Nexus brand built by Asian brands, first by Samsung then by LG. Google has no reason left to keep Motorola for making phones anymore. Also, Google may just dump the whole Nexus brand by 2015. This rumor lines up perfectly with the decision to Sell Motorola as well.