On October 30, 2014, Lenovo completed its acquisition of Motorola Mobility from Google. This acquisition, which was announced in January, means that the Chinese company that bought IBM’s x86 server and desktop products now has mobile device manufacture in its portfolio.
What will be interesting to see is if the Motorola brand is retired in favour of Lenovo. Currently this is not the case, as for the moment, Lenovo plans to operate it as a wholly owned Lenovo subsidiary, with Motorola’s headquarters remaining in Chicago. This is good news for the 3.5K employees around the world, and even more so for the 2.8K in the US who currently design, engineer, sell, and support its current devices. That said, Microsoft also indicated that it would be keeping the Nokia brand after its purchase of that failing manufacturer, but it has recently announced that all new Lumia devices will carry the Microsoft brand rather than Nokia. Lenovo did manufacture IBM x86 devices under the IBM brand, true, but this is a slightly different situation, as the IBM deal was originally only a manufacturing deal before the outright purchase.
What has Lenovo received for its money here? It has gained the full portfolio of its smartphones. I will not say “innovative,” like its press release and full future product road maps. Interestingly, though the purchase does not transfer ownership of Motorola patents, which are remaining with Google, Lenovo has licensed their use.
With this purchase, Lenovo has become the third biggest manufacturer of smartphones, behind Apple and Samsung, leapfrogging Huawei in terms of unit numbers globally. As part of the announcement, Yang Yuanqing, Lenovo’s chairman and CEO, stated:
“Today we achieved a historic milestone for Lenovo and for Motorola—and together we are ready to compete, grow, and win in the global smartphone market. By building a strong number three and a credible challenger to the top two in smartphones, we will give the market something it has needed: choice, competition, and a new spark of innovation. This partnership has always been a perfect fit. Lenovo has a clear strategy, great global scale, and proven operational excellence. Motorola brings a strong presence in the U.S. and other mature markets, great carrier relationships, an iconic brand, a strong IP portfolio, and an incredibly talented team. This is a winning combination.”
This acquisition is actually the best thing that could have happened to Motorola. Google purchased the company in 2012 for over $12.5B and sold it this year to Lenovo for $2.9B (yes, that’s right). Google had been struggling to understand what to do with it. By being off-loaded it to a known entity in hardware manufacturing, Motorola will gain easy access to modern build processes that should drive device costs downward. From Google’s perspective, by keeping hold of Motorola’s patents, it will still gain revenue without any of the ownership woes. Further, Motorola’s smartphones are all Android-based—another win for Google. In Motorola’s parting statement, Google CEO Larry Page said, “Motorola is in great hands with Lenovo, a company that’s all-in on making great devices.”
Time will tell if this deal will reap rewards and push Motorola back into the mainstream, or if it is just the last hurrah of the jaded ’70s pop star. Personally, I would miss Motorola if it did disappear. But if it is rebranded as Lenovo, a brand that is getting decent traction and a steady reputation for quality, that may actually be a much better outcome for its employees.