Google, which entered the phone hardware business by acquiring Motorola Mobility for $12.5 billion in 2012, is getting out of it again. It’s agreed to sell its Motorola business to China’s Lenovo for $2.91 billion:
Lenovo, which in 2005 acquired IBM’s PC business and its legendary PC brand, will now acquire world-renowned Motorola Mobility, including the MOTOROLA brand and Motorola Mobility’s portfolio of innovative smartphones like the Moto X and Moto G and the DROID™ Ultra series. In addition to current products, Lenovo will take ownership of the future Motorola Mobility product roadmap.
Google will maintain ownership of the vast majority of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures. As part of its ongoing relationship with Google, Lenovo will receive a license to this rich portfolio of patents and other intellectual property. Additionally Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio.
Upon hearing this news, I found myself — figuratively speaking, at least — both shaking my head with sadness and nodding at the logic of it all.
Here’s the sad part: When Google agreed to buy Motorola in the first place, I hoped that it would really subsume the business, so that the two companies’ combined forces could make the very best phones they knew how, with the sort of integration of software, services and hardware that can only emerge from one team. (Exhibit A: the iPhone.) If it had done so, it could have made the best Android phones on the market. Maybe the best phones, period.
Right from the start, though, Google adamantly denied that it was going to fully digest Motorola. And it had good reason to do so. Android is so successful because so many third-party hardware makers have embraced it. Reasonably enough, those companies looked on Motorola as competition. So Google treated Moto as a stand-alone operation, supposedly operating at arms’ length from the rest of the company, with no more access to the Android team than Samsung, HTC or other third-party manufacturers. That always felt like the worst of all worlds to me.
With Google unwilling to make the most of Motorola — and new phones such as the Moto X not turning the business around — turning the brand over to someone else with big ambitions in the smartphone market might be the next best outcome. Lenovo, which is already a major player in smartphones in other parts of the world, has said that it has designs on the U.S, market, too. Owning Motorola would help fast-forward that ambition, and certainly makes more sense than last year’s rumor that the company wanted to buy BlackBerry.
The BlackBerry deal was supposedly foiled by the Canadian government having national-security concerns over a Chinese company owning a major provider of communications hardware and services. There’s going to be plenty of similar debate in this country, too, before any sign-off from the feds. But if it happens, Lenovo — which has done well by the IBM PC business it bought almost a decade ago — stands as good a chance of figuring out what to do with Motorola as any other prospective acquirer which comes to mind. And rather than losing money in the brutally competitive smartphone wars, Google can turn its attention to the emerging smart-hardware businesses it entered by buying Nest.