While we can try and say that nothing really shocks us anymore, we don’t think that any of us saw this coming. After reports started coming in fast and thick this afternoon that Lenovo was planning to buy Motorola Mobility from Google, it’s been confirmed by El Goog itself. The going price for Motorola is $2.91 billion which is a far cry from the $12.5 billion that Google originally paid for Motorola Mobility. As Google nears closer to reporting their earnings tomorrow, it’s going to be interesting to see how investors respond to this new shift.
It’s been widely known that Google has been losing money on Motorola’s hardware division every quarter. Motorola’s patent portfolio also hasn’t been as helpful as expected and those things combined together could have led Google to sign the deal. Plus, a big part of the price difference is that Google keeps the patent portfolio for future use, which is worth quite a lot. It should be noted that although Google and Lenovo have struck a deal, it has yet to be approved by the Chinese and American governments which will certainly take time. Google’s full press release can be found down below if you’d like to hear Larry Page’s thoughts on the acquisition.
What do you guys think of this deal?Show Press Release
We acquired Motorola in 2012 to help supercharge the Android ecosystem by creating a stronger patent portfolio for Google and great smartphones for users. Over the past 19 months, Dennis Woodside and the Motorola team have done a tremendous job reinventing the company. They’ve focused on building a smaller number of great (and great value) smartphones that consumers love. Both the Moto G and the Moto X are doing really well, and I’m very excited about the smartphone lineup for 2014. And on the intellectual property side, Motorola’s patents have helped create a level playing field, which is good news for all Android’s users and partners.
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 and is the largest (and fastest-growing) PC manufacturer in the world. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere. As a side note, this does not signal a larger shift for our other hardware efforts. The dynamics and maturity of the wearable and home markets, for example, are very different from that of the mobile industry. We’re excited by the opportunities to build amazing new products for users within these emerging ecosystems.
Lenovo has the expertise and track record to scale Motorola into a major player within the Android ecosystem. They have a lot of experience in hardware, and they have global reach. In addition, Lenovo intends to keep Motorola’s distinct brand identity—just as they did when they acquired ThinkPad from IBM in 2005. Google will retain the vast majority of Motorola’s patents, which we will continue to use to defend the entire Android ecosystem.
The deal has yet to be approved in the U.S. or China, and this usually takes time. So until then, it’s business as usual. I’m phenomenally impressed with everything the Motorola team has achieved and confident that with Lenovo as a partner, Motorola will build more and more great products for people everywhere.
Posted by Larry Page, CEO