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January 29th, 2014

Google Passes Motorola to Lenovo

Today it was announced that Google is selling handset maker Motorola Mobility to Lenovo for $2.91 billion. The move comes less than a week after the Chinese electronics company also agreed to acquire IBM’s low-end server business for $2.3 billion. Google purchased Motorola Mobility for $12.5 billion in 2012.

Although the move is not necessarily a surprise, it is somewhat unexpected.

When Google purchased the consumer electronics end of Motorola, media pundits were quick to point out that the search company was primarily interested in attaining Motorola’s valuable patent portfolio. At the time, Google’s patent holdings were somewhere between slim to none and they desperately needed patents to defend themselves against legal actions, as Android had become a magnet for attracting patent trolls. Since then, Google has been actively adding patents to their portfolio.

Motorola Quasar TV adAt the time, the Google/Motorola partnership seemed like a good fit and it was expected that Google would use the brand to set the bar for mobile devices running Android. However, the close cooperation between Google and their newly acquired manufacturing partner never seemed to develop, as Google continued to make deals with the likes of LG, Samsung and Asus to manufacture the Google branded Nexus line of handsets and tablets.

In the deal announced today, Google keeps the lion’s share of the patent’s they gained when the took ownership of the company, although Lenovo will gain over 2,000 “patent assets.” There’s no news yet on exactly which patents will change hands or if regulators in the U.S. or China are expected to object. What is known is that both the U.S. and Chinese governments will have to approve the sale.

At first glance it might seem as if Google is losing money on this deal, by selling a company purchased for over $12 billion for a little under $3 billion. That doesn’t seem to be the case, however. In a filing with the SEC last year, Google valued the patents and other technology gained from Motorola at $5.5 billion. In addition, at the time of the purchase, Google gained $3 billion in cash that Motorola held, as well as $1 billion in tax credits. In 2012, Motorola Mobility’s cable modem and set-top box business was sold to Arris Group for $2.35 billion.

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Although Motorola had once been a leading maker of feature phones, their market share had fallen into the also-ran realm by the time of the Google purchase. That hasn’t changed much under the search company’s ownership. However, they are a brand with a rich history in the U.S., with many Americans still remembering the Quasar branded televisions that were heavily advertised in the late 1960s and early 1970s. The company began in the early 1930s as the first manufacturer of car radios.

Undoubtedly, it’s the brand name recognition that Lenovo hopes to leverage with this purchase. Although the company has had some success marketing smartphones in China, they have yet to make much of a dent in the U.S. market.

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Christine Hall has been a journalist since 1971. In 2001, she began writing a weekly consumer computer column and started covering Linux and FOSS in 2002 after making the switch to GNU/Linux. Follow her on Twitter: @BrideOfLinux

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