— Lenovo (@lenovo) January 29, 2014
In the latest blog post and a press release by Google Founder and CEO Larry Page they have announced that Google and Lenovo came into terms in selling Motorola Mobility to Lenovo for the amount of $2.91Billion. The reason for the sale according to the press release is that although their two products the Moto G and the Moto X did well the smartphone market is competitive that, according to Larry Page, Motorola is better off serving the purposes of Lenovo. Further, according to Google the acquisition of Motorola in 2012 was a move to strengthen their patent portfolio especially for the Android ecosystem and that with Motorola’s sale to Lenovo, Google will still keep most of the patents, Lenovo however will be able to have license to these patents. Not included in this deal is the Project Ara an open-hardware platform allowing the construction of modular phones.
This got us thinking though, how much did Google spend to acquire Motorola in 2011? To answer that a simple Google search and viola! its about $12Billion. Which means that when Google sold Motorola $2.91 Billion they have incurred a loss of more than $9 Billion, apart from that, Google also reported losses on Motorola of about $1.1 Billion in 2012. So one might wonder if the losses incurred by Motorola was a big factor in it being sold to Lenovo. Others might also think that Google would like to get back to the good side of Samsung, the largest phone manufacturer and integrator of the Android OS. Their relationship has gone sour when Google acquired Motorola but recently, the two entered into a patent cross licensing deal. It seems that Google’s patents would have proved to be useful after all. So if patents were the thing they were after during their acquisition in 2012 then Google might be right on the money.
Let’s Talk About Lenovo
For quite sometime now Lenovo has been trying to compete in the mobile industry, as of present they are 4th in the world. However, with their acquisition of Motorola it would seem that they are going to be a force to be reckoned with. With the licenses they got in the patents of Motorola it would seem like we are in for a revolutionary new smartphone business, but we could not say just yet if Lenovo will be able to come up with something disruptive. With the arsenal that they’ve got it might just be possible. Now the only question is how would they brand the new Motorola? Your guess is as good as ours.
Well the first question is did Google really incurred losses on the deal? In our opinion the patents are valuable enough especially if it would serve its ultimate purpose, that is to defend the Android Ecosystem. We should remember that lots of lawsuits were previously filed because of patents, remember Samsung vs. Apple? For Google, it has recently acquired Nest a home automation company, and according to their press release selling Motorola would allow Google to focus their energy in developing wearables (like Google Glass) and other hardware. Still this is an exciting time in the world of technology.