Google Sells Motorola for $2.9 Billion
Google has just closed a $2.9 billion dollar deal with Lenovo, giving up it’s rights to the Motorola brand, current and future Motorola products, over 2,000 patents, and Motorola’s trademark portfolio. The near $3 billion sale consists of $660 million in cash, $750 million of Lenovo stock, and $1.5 billion in a promissory note. This move to opt-out of the smartphone manufacturing business may have been Google’s plan all along since they bought Motorola for $12.5 billion in 2011: to ‘milk’ Motorola for it’s patents, engineering talent, and mobile market insight, and then to sell it off later.
This was Google’s way out of the smartphone manufacturing business, a business that they didn’t have a chance of making any real money in, and gives them the ability to concentrate on real opportunities, like improving Android to be the dominant mobile operating system, without the diversion of having to run a device manufacturing company. Google’s selling of smartphones also raised conflict with companies like Samsung and HTC, which use Google’s Android, and selling Motorola releases this tension.
Google CEO Larry Page says that the company will be stepping back from the smartphone manufacturing business when the Lenovo deal closes. “The smartphone market is super-competitive, and to thrive, it helps to be all-in when it comes to making mobile devices.” he added. Google will continue to sell it’s own Nexus phones and tablets, as they are manufactured by LG and Asus.
Apple devices do very well in the consumer electronics market because of the hardware-software integration; they’re ‘made together to be together’. Motorola may have been Google’s attempt to mirror this approach.