The last few days have been interesting for the mobile industry. First Google announced the sale of Motorola to Lenovo, before kissing and making up with Samsung. Clearly Google is ensuring one thing – the continued development and growth of Android. First lets look at the picture from a high level:
Google bought Motorola for $12.5 billion in August 2011 and the acquisition was completely unexpected. Google clearly wanted to test whether they could enter the hardware design and development business which has been executed to perfection by Apple. Commentators at the time said that Google overpaid for the acquisitions by multiples – the analysts were quite correct to a degree. If one looks at Motorola Mobility an argument can be made that the hardware part of their business was burning too much money while continuing to lose ground to Samsung, Apple, Nokia and Sony. The point is that the assets Google wanted and paid billions for are not the mobile phone business, but rather Motorola’s mobile patents.
It was a very strategic acquisition as by purchasing Motorola Mobility and holding on to the business for 3 years before selling it to Lenovo for $3 billion ensures that Google would not be scrutinised by governmental agencies for being anti-competitive. The patents were the assets that Google wanted, ultimately the billions spent on the patents will protect them from Microsoft, Apple and Nokia.
Secondly, by selling Motorola Mobility Google becomes OEM independent again. Over the last 3 years the Motorola Mobility ownership definitely strained their relationship with Samsung, Sony and LG. Samsung is the one big manufacturer that Google needs to keep happy regarding being an Android OEM as their devices have ensured that Android is adopted in the high-end smartphone space.
Lenovo is quietly becoming a big player in mobile and computing and it will be interesting to keep an eye on what plans Lenovo has for Motorola Mobility. Lenovo is a very big cellphone manufacturer in Asia and with ownership in Motorola , Lenovo will be able to enter other markets such as Africa, Europe and North America.
Google is a strategic business with regards to mergers and acquisitions and as many might say that they made a loss $9 billion on Motorola Mobility, they got what they wanted – patents. Lenovo on the other hand is now potentially a competitor for Samsung globally. Interesting times are guaranteed with this news..
