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Lenovo Buys Motorola from Google: What Does it Mean?

By - Source: Tom's Hardware US | B 24 comments

Lenovo looks to go up against Samsung for the lion's share of the Android smartphone market.

Lenovo has announced a $2.91 billion deal to acquire Motorola Mobility from Google. Motorola's handset business was sold to Google in 2012 for $12.5 billion, but hasn't made any money for the search giant.

Google said that it purchased Motorola Mobility for its patents, most of which aren't included in the sale to Lenovo. Instead, Lenovo will receive a license to the portfolio of patents and other intellectual property. On the surface, Lenovo getting Motorola for less than a quarter of what Google paid for it sounds like a steal (after all, are those patents really worth $9 billion?), but this Chinese company is after more than just a bargain. Lenovo is plotting world domination – at least in terms of computers and electronics. Less than a week ago, Lenovo acquired IBM's x86 server business.

Lenovo's new product onslaught at CES 2014 demonstrated that the company wants to leave no market segment untouched. Smartphones is still an area that the company is just dabbling in, and only in limited markets. We saw a handful of Lenovo smartphones running Android at CES, but none of them were position for the North American market.

Yang Yuanqing, chairman and CEO of Lenovo, said that the company would be making a big push into the US and western European markets in 2015. With Samsung virtually uncontested in the Android market, Lenovo sees an opportunity here to steal a piece of the pie, especially in the western markets where consumers see the phone choices simply as "iPhone" or "Galaxy."

“The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones. We will immediately have the opportunity to become a strong global player in the fast-growing mobile space,” said Yang Yuanqing in a prepared statement.

This sale dashes any hopes of there being a true Google-made phone from Mountain View. While Nexus devices are a collaboration between hardware partners such as Samsung and LG, with Google providing the software support, the sale of Motorola Mobility to Lenovo means that we'll probably never see a phone that's designed top to bottom by Google.

This could also mean an end to devices like the Moto X and Moto G, which weren't quite Nexus devices, but shared a lot of design philosophy in creating a pure Google experience. Moto X and Moto G owners enjoyed a near-stock build of Android, which meant timely updates to the latest updates of the mobile operating system.

With Motorola Mobility in its stables, Lenovo instantly gains the #3 position in the U.S. among Android smartphone manufacturers, behind Samsung and HTC. According to Opera Mediaworks, Samsung has 58.45% of Android device marketshare, with HTC at 10.88% and Motorola at 8.7%.

While a long ways away from Samsung's lead, Motorola's relationship with carriers, particularly with its DROID brand, will help Lenovo jump into the U.S. market. Given how committed Lenovo has been to serving all the segments of the computer market, don't be surprised to see it put forth a similar effort in the coming years. After all, who wouldn't want a ThinkPad phone?

Relax, this is just a case for the Nexus 5 (photo credit: Alex Davies)Relax, this is just a case for the Nexus 5 (photo credit: Alex Davies)

Check out all our coverage on Lenovo phones from CES 2014:

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  • 1 Hide
    vaughn2k , January 29, 2014 4:30 PM
    I have a P770 from Lenovo, and yes, the price is also a steal!
  • -2 Hide
    gamebrigada , January 29, 2014 4:50 PM
    Sigh... I guess my droid maxx was the best phone ever made then... Doubt Lenovo will take Motorola in the direction its been going. Yes its not the best phone specs wise, but man through all the tests I've taken it, I chose it every time.
  • -2 Hide
    vern72 , January 29, 2014 4:50 PM
    First no more Nexus and now this? We're going to get gouged on the price of smartphones in the near future!
  • Display all 24 comments.
  • -2 Hide
    ddpruitt , January 29, 2014 5:14 PM
    Quote:
    On the surface, Lenovo getting Motorola for less than a quarter of what Google paid for it sounds like a steal (after all, are those patents really worth $9 billion?)


    A) They're only buying the Handset business, the set top business for around $2.5 billion
    B) Google always said they were in it for the patents and didn't want hardware
    C) Google is going to license the patents and make much more than what they paid
    D) Samsung lost a $1 trillion dollar lawsuit (obviously it's still going through the courts but it's expensive

    So all in all I'd say Google's the one who got the bargain.
  • -1 Hide
    Jgriff , January 29, 2014 7:11 PM
    I'd like to see samsung knocked down a notch in any which way. Recently I've got nothing but sub par quality products from them, had to return 3 led tvs because they made annoying buzzing sounds...wtf is that? Using crappy ass parts in an expensive tv makes no sense. I've NEVER had that happen with sony or vizio or even some of the cheaper no name branded tvs I've bought. I'll never buy another samsung product again after that.
  • 2 Hide
    dragonsqrrl , January 29, 2014 8:10 PM
    I hope it means we'll continue to see timely Android updates for the Moto X and Moto G.
  • 2 Hide
    ff6shadow , January 29, 2014 8:29 PM
    Lenovo as a brand has surpassed all my expectations. They're the one vendor when it comes to laptops, that I would recommend to anyone. They just make fantastic stuff. Super durable. Excellent designs. Thinkpad is just amazing. I will absolutely buy a thinkpad phone in 2015 when it's available.
  • -1 Hide
    Caffeinecarl , January 29, 2014 9:31 PM
    It means that I won't be buying Motorola ever again! Say NO to cheap Chinese garbage!
  • 4 Hide
    milktea , January 29, 2014 9:58 PM
    Quote:
    It means that I won't be buying Motorola ever again! Say NO to cheap Chinese garbage!
    Lenovo's quality is actually pretty good, especially their business laptops. Not all Made in China are garbage. A lot of high quality products are made in China, iphone for example. And if you're into the audio, FiiO is actually is a real deal. It really surprises many other high-end brands.
  • 0 Hide
    Hammerxc , January 29, 2014 10:07 PM
    Dang it!!! I recently got a Moto X on Verizon and absolutely love it. I've had a Nexus 4 on Straight Talk (AT&T service) for over a year and was surprised how quickly the Moto X has won me over. While I carry both (work/home thing) I find myself reaching for an using the Moto X almost exclusively. My experience with the Moto X had me anxious to see what Motorola would be releasing next (instead of anxious for the newest Nexus). Now I'm worried the Moto X thought line may be ended just after it got started. Heck, I might now buy a Moto X unlocked to replace my Nexus 4 on StraighTalk. No, I'm not kidding, I live the Moto X. It's form factor fits the hand like it was made for it. Never slips, never drops, never feels awkward when talking or typing. It's only got a dual core CPU where the Nexus 4 has a quad, and it's VERY responsive. Anyway, RIP Google owned Motorola (tear falls).
  • 0 Hide
    rdc85 , January 29, 2014 11:09 PM
    I'm also own a lenovo laptop, so far I'm satisfied.. their build quite sturdy,,,,
  • 2 Hide
    maniac62 , January 30, 2014 3:36 AM
    Quote:
    It means that I won't be buying Motorola ever again! Say NO to cheap Chinese garbage!
    People said that to Japanese products in the 50s and 60s, and to Korean products in the 80s and 90s. And now it is China, who's gonna be the next?
  • -1 Hide
    back_by_demand , January 30, 2014 4:18 AM
    The subtext here of course is that Google just lost $10 billion, nobody can take that kind of hit, not Apple, not Microsoft, not IBM - $10 billion is not chump change to anyone and somebody is likely to get fired over it
  • 0 Hide
    house70 , January 30, 2014 5:14 AM
    Quote:
    First no more Nexus and now this? We're going to get gouged on the price of smartphones in the near future!
    This deal is announced officially (even though the regulatory bodies have yet to approve it); the Nexus rumor is just something from a Russian site with absolutely no weight behind it. I don't think there is enough salt in the ocean for the kind of grain you'll need to take with that rumor.
  • -1 Hide
    cityuser , January 30, 2014 5:54 AM
    What Does it Mean?Is it obvious that it means Google loose money ?
  • -1 Hide
    catfishtx , January 30, 2014 6:21 AM
    As long as Moto keeps supporting her Moto G, my daughter will be happy. You have to remember, Google already sold Moto's set top box division for $2.5B, so Google is out about $7.1B so far on this deal. But we have no way of knowing all of the money they have earned from the various licensing deals or the money they might be potentially saving in the courtroom. Maybe Google saw what Samsung is going through with Apple and did not want to follow suit.
  • 3 Hide
    keddaw , January 30, 2014 7:51 AM
    Google bought a division of Motorola for $12.5bn and immediately sold the set top box sub-division for over $2.5bn. Motorola also had about $3bn in cash at time of the purchase. Google then used Motorola's current and previous losses and will continue using them to avoid paying US tax for about another 4 years (at roughly $1bn per year plus the two years they owned them). Now they have sold the bulk of the remaining Motorola manufacturing business for $2.9bn.Seems to me Google paid $12.5bn and got back $8.5bn, will have written off $6bn in tax AND got to keep the vast majority of the desirable patents (that they bought Motorola for in the first place).Everyone wins apart from the US taxpayer.
  • -3 Hide
    jasonpwns , January 30, 2014 10:26 AM
    Quote:
    Quote:
    On the surface, Lenovo getting Motorola for less than a quarter of what Google paid for it sounds like a steal (after all, are those patents really worth $9 billion?)
    Why couldn't they both have gotten a steal?A) They're only buying the Handset business, the set top business for around $2.5 billionB) Google always said they were in it for the patents and didn't want hardwareC) Google is going to license the patents and make much more than what they paidD) Samsung lost a $1 trillion dollar lawsuit (obviously it's still going through the courts but it's expensiveSo all in all I'd say Google's the one who got the bargain.
    Quote:
    Quote:
    On the surface, Lenovo getting Motorola for less than a quarter of what Google paid for it sounds like a steal (after all, are those patents really worth $9 billion?)
    A) They're only buying the Handset business, the set top business for around $2.5 billionB) Google always said they were in it for the patents and didn't want hardwareC) Google is going to license the patents and make much more than what they paidD) Samsung lost a $1 trillion dollar lawsuit (obviously it's still going through the courts but it's expensiveSo all in all I'd say Google's the one who got the bargain.
    Quote:
    Quote:
    On the surface, Lenovo getting Motorola for less than a quarter of what Google paid for it sounds like a steal (after all, are those patents really worth $9 billion?)
    A) They're only buying the Handset business, the set top business for around $2.5 billionB) Google always said they were in it for the patents and didn't want hardwareC) Google is going to license the patents and make much more than what they paidD) Samsung lost a $1 trillion dollar lawsuit (obviously it's still going through the courts but it's expensiveSo all in all I'd say Google's the one who got the bargain.
    Quote:
    Quote:
    On the surface, Lenovo getting Motorola for less than a quarter of what Google paid for it sounds like a steal (after all, are those patents really worth $9 billion?)
    A) They're only buying the Handset business, the set top business for around $2.5 billionB) Google always said they were in it for the patents and didn't want hardwareC) Google is going to license the patents and make much more than what they paidD) Samsung lost a $1 trillion dollar lawsuit (obviously it's still going through the courts but it's expensiveSo all in all I'd say Google's the one who got the bargain.
  • 0 Hide
    zaratustra06 , January 30, 2014 12:11 PM
    What does it mean? Double rainbow all the way!
  • 0 Hide
    JD88 , January 30, 2014 3:30 PM
    Quote:
    The subtext here of course is that Google just lost $10 billion, nobody can take that kind of hit, not Apple, not Microsoft, not IBM - $10 billion is not chump change to anyone and somebody is likely to get fired over it


    Nonsense.

    The real math is quite a bit different. Motorola had around $3 Billion in cash when Google bought them. They later sold other aspects of Motorola's business (like set top boxes) for a large sum. Google still gets the patents which is what it was after to begin with. It knew MS and Apple would try to patent troll Android and that's exactly what happened. In that respect alone, it's worth the money.

    The obvious drawback here is what happens to Motorola. They are currently selling the best Android phones in my opinion. Our Moto Xs have been absolutely outstanding. Under Google's leadership, they went from no direction to innovating unlike any other manufacturer. Lenovo makes good products. Here's hoping they keep Moto on the right path.

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