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Lenovo Buys Motorola Mobility from Google for $2.91 Billion

Consider the entire PC, server and smartphone landscape changed. At least for now. And, crown Lenovo the champion of buying iconic brands, at least for now.

DH Kass

January 30, 2014

3 Min Read
Lenovo Buys Motorola Mobility from Google for $2.91 Billion

Consider the entire PC, server and smartphone landscape changed. At least for now. And, crown Lenovo the champion of buying iconic brands, at least for now.

Lenovo’s $2.91 billion purchase of Google’s (GOOG) Motorola Mobility smartphone business, following its blockbuster $2.3 billion acquisition of IBM’s (IBM) x86 server business last week, means that customers can standardize on the Chinese manufacturer’s platforms from PCs to servers to mobile phones. Boiled down it means Lenovo owns three critical end-points–and that alters the playing field quite a bit.

Lenovo plans to pay for Motorola with $660 million in cash and $750 million in stock, making up the remaining $1.5 billion with a three-year promissory note to Google. Similar to the IBM x86 transaction, the deal likely will be subject to a U.S. government national security review, which might become more stringent considering it’s Lenovo’s second acquisition of a U.S. asset in a week.

The sale marks the end of Google’s 21-month, $12.5 billion adventure into manufacturing mobile devices, which saw Motorola dump more than $1 billion in losses and created a steady flood of 5,000 laid off workers.

But for Lenovo, the Motorola purchase not only gives it an immediate strong footing in the Americas for smartphones but also a market presence in Western Europe to complement a solid position in its native China, where the vendor’s 13 percent stake positions it second behind only Samsung in units sold, and accounts for roughly 95 percent of its smartphone sales. With that in mind, it will be interesting to see how Lenovo handles Motorola’s short product lineup, which the company has pared down to the Moto X, Moto G and Droid series.

Under terms of the deal, Google will retain most of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures. Lenovo gains ownership of some 2,000 patent assets, the Motorola Mobility brand and trademark and the vendor’s future product roadmap. In addition, it will gain access to the Motorola intellectual property portfolio through a licensing agreement with Google, the terms of which were not disclosed.

“The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones,” said Yang Yuanqing, Lenovo chairman and chief executive. “We will immediately have the opportunity to become a strong global player in the fast-growing mobile space.”

How will Lenovo leverage its channel ecosystem to take advantage of its newfound, multi-platform, multi-OS strengths? Some of the answer resides in Motorola Mobility chief executive Dennis Woodside’s suggestion that Lenovo’s PC position and sales reach will catalyze the mobile device maker’s growth.

“As part of Lenovo, Motorola Mobility will have a rapid path to achieving our goal of reaching the next 100 million people with the mobile Internet,” said Woodside. “With the recent launches of Moto X and Moto G, we have tremendous momentum right now and Lenovo’s hardware expertise and global reach will only help to accelerate this,” he said.

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About the Author(s)

DH Kass

Senior Contributing Blogger, The VAR Guy

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