Google to sell Motorola to Lenovo for $2.9 billion (Updated – official!)

January 29, 2014
988

Motorola X Phone Ad

Update: it’s official. Lenovo will pay $2.91 billion for Motorola, with $1.41 billion immediately, and the rest over a period of three years. Lenovo will gain all of Motorola’s assets, approximately 2,000 patents, and a license for the Motorola patents kept by Google.

According to Reuters, citing people familiar with the matter, Google will receive $3 billion for the phone maker, in a deal that also includes some patents. The deal is said to be close to finalization – TechCrunch reports Google has actually hold off the sale due to tax reasons.

Google acquired Motorola Mobility back in 2011 for a massive $12.5 billion, in what most industry watchers defined as a patent grab. At the time, Motorola was losing money and market share at an accelerated rate, but the storied company still had a trove of mobile patents that Google could use to shore up its defenses in the ongoing patent wars.

Motorola has been bleeding money ever since Google acquired it. Despite the release of the moderately successful Moto X followed by the popular Moto G, the company lost a quarter of a billion in the last reported quarter, and there were no signs of improvement.

Strictly financially speaking, Google is likely walking away with a loss from the entire affair. However, the company will get to keep most patents and a license for the patents that are going to Lenovo.

For Lenovo, the deal offers a bridgehead to the lucrative and strategically crucial North American market. The Chinese company is the largest PC maker in the world, and has a serious presence in the US through its PC business (and, as of this week, server business). Lenovo only recently tackled the smartphone business, but has already established a strong presence in China and other Asian markets. With Motorola in its fold, Lenovo can move to aggressive international expansion, backed by a prestigious and well-known brand that still has a loyal user base.

Google drops hardware, Samsung scales down software. Coincidence?

The context of the deal is very interesting – just hours ago, news broke that Samsung agreed to scale down its customization of Android at Google’s request, in a broad agreement that one source defined as a “sea change”. And earlier this week, Google and Samsung announced a decade-long IP partnership that entails cross-licensing all existing and future patents.

It’s possible that Google’s offloading of Motorola is part of a strategy to align closer to Samsung. It’s all speculation at this point, but some really big pieces of the puzzle seem to be falling into place: Samsung agrees to scale down its software ambitions, while Google gives up on its hardware arm and stops putting pressure on Samsung with super competitive devices like the Moto G.

Stay tuned for more coverage.

Comments

Load More