Lenovo Buys Motorola From Google

Posted by on Jan 30, 2014 in News | No Comments

The headline is pretty straightforward (Lenovo pays Google $2.91 Billion for Motorola), but there’re actually a lot of implications to this deal.

Google, as you might remember, bought Motorola two years ago for $12.5 Billion and at the time, many speculated that this could indicate that the Search Giant was preparing to steal a page from the Apple playbook and make its own devices specifically for the Android OS. This never materialized. The company has released a number of “Vanilla” Android devices (the Google Nexus line), but these were all built by Motorola competitors.

Lenovo, meanwhile, has become an absolute hardware beast in the last few years. It passed HP as the largest PC maker last year, and seems to be one of the few non-Apple computer companies that’s been unaffected by the over-all shrinking of the PC market.

So what could this mean for both companies?

For Google:

Despite the headline of selling a company for $10 less than what it paid to acquire it, Google actually did pretty well. After accounting for profits made from selling off portions of the Motorola business, along with surplus cash and deferred tax assets from Motorola, Google really only lost about $1.5 Billion on the deal–until you factor in the Motorola’s patents weren’t included in the Lenovo deal. So Google essentially bought a HUGE number of mobile patents which it can use to defend Android from Apple lawsuits. That’s a pretty good deal for them.

Google also acquired Nest, the home-automation company founded by former Apple hardware makers. At the time, there was a lot of speculation that the acquisition was as much about bringing in the very talented former Apple Employees (CEO Tony Fadell is credited as the “Father of the iPod”) and what this could mean for Google hardware. After this sale, it’s probably safe to assume that the hardware won’t be phone/tablets–perhaps this could signal that Google’s getting ready to look deeper into Wearables such as its Google Glass project.

For Lenovo:

Lenovo has some deep, deep inroads in Enterprise. They sell directly to a lot of business users. Purchasing Motorola opens the door for them to fill the gap that Blackberry used to fill–a business-first mobile phone. This could be bad news for Microsoft who has made no secret of the fact that they’re gunning for Blackberry’s position. The question is: who can pull off the best integration? The hardware company or the software company? Can either do so in a way that makes companies (or consumers) reconsider BYOD?

Sources:

http://bgr.com/2014/01/30/google-motorola-lenovo-sale-patents-earnings/
http://bgr.com/2014/01/30/google-nest-acquisition-hardware/
http://news.cnet.com/8301-1035_3-57618035-94/meet-lenovo-the-overnight-hardware-colossus/