Technology giant Google has announced its plans to sell mobile phone manufacturer Motorola to Chinese firm Lenovo for $2.91 billion.
Lenovo will be buying a strong footing and international mobile phone brand with which it can expand its marketshare in the same way it did in the PC market after the purchase of the IBM ThinkPad brand in 2005, and Google will keep hold of the majority of the Motorola patent portfolio.
Google acquired Motorola in 2012 for $12.5 billion in order to buy the former mobile phone giant’s patents to give Google a solid legal defence against the threats from Apple and Microsoft over the open source Android operating system. That acquisition put Google in the awkward position of both supplying an independent OS in Android, but also competing with its own Android manufacturer base and firms such as Samsung, HTC, and Sony, and selling that unit to Lenovo will make the Android ecosystem a more level playing field for all.
Moreover, by keeping hold of Motorola’s patent portfolio, Google will be able to continue to protect itself and Android smartphone and tablet manufacturers from legal challenges over intellectual property from competitors.
The two companies have signed an agreement, but as with all such major acquisitions the deal will also need to be approved by US and Chinese authorities.
In a leaked email to Google staff, Google founder and CEO Larry Page said:
Googlers,
We are just in the process of announcing the sale of Motorola to Lenovo for $2.91 billion. This is important news so I wanted to communicate directly with you.
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 nineteen 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 line-up 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 US or China and this usually takes time. So please don’t speculate about the impact of the deal either outside or inside Google, and direct any press inquiries to press@google.com. Until it closes it’s business as usual. But if you have any questions, please come to TGIF tomorrow (or add them to the dory).
Finally, a big thank you to the entire hard working Motorola team. I’d also like to thank Dennis for taking this on and also working really hard to make great products. I’m proud of everything the team at Motorola has achieved and confident that with Lenovo as a partner, Motorola will build more and more great products for people everywhere.
Photograph by Marc Flores