The search giant announced its deal to sell Motorola Mobility smartphone unit to Lenovo for about $2.9 billion – this is only 2 years after Google acquired the unit in its largest ever deal. Moto X and Moto G smartphone manufacturer was bought by Google for $12.5 billion after Larry Page, Google’s co-founder, took back day-to-day running of the company. Now the company is sold almost five times cheaper: Lenovo will pay $660 million in cash, $750 million in its own shares, and a $1.5 billion three-year promissory note.
Two years ago this acquisition seemed to be a great move to develop Google’s mobile business. However, shareholders and analysts didn’t like the idea. Motorola kept losing money and showed disappointing sales of its new flagship phone the Moto X. So, the today’s sale looks like a total disaster, but Google will keep something: most of the 17,000 Motorola Mobility patents the company got after the acquisition. They have become a key battleground among tech companies, particularly in mobile industry. In the meantime, Lenovo will get some patent assets too, along with the Motorola Mobility brand and trademark.
Google admitted that Motorola had helped Android OS create a “level playing field” with its rivals. The company explained that the smartphone market is highly competitive, so Motorola would be better served by Lenovo – the company that owns a rapidly growing smartphone business and remains the largest PC maker worldwide. This decision will allow Google to turn their attention to driving innovation across the Android ecosystem.
The deal with Lenovo comes as the search giant has turned its efforts towards both hardware and software products. Today Google is working on wearable computers, smart watches and driverless cars aside from traditional tablets and laptops. Back in January Google bought Nest, manufacturer of smart home devices, and now it tries to explain that the Motorola sale isn’t a radical change of tack.
By the way, this isn’t the first sale Google has made of assets it acquired after purchasing Motorola Mobility. Two years ago Google sold Motorola Home, which made set-top boxes and cable modems.
As for the other part of the deal, Lenovo, it is known as the largest PC maker in the world, currently expanding into other markets. That’s, on the contrary, the company’s second large buy this year – a week ago Lenovo paid $2.3 billion for IBM’s server business, and IBM’s laptop business was acquired by the company 9 years ago.
Lenovo is happy about the deal – its experts believe that they will immediately become a strong global player in the mobile space. The company is sure it will manage to bring together the best of Motorola to make products customers will love.