Google selling Motorola unit to Lenovo for $2.9B

Lenovo gears up to strengthen its position in the smartphone market, with a strong PC business and a fast-growing smartphone business, Lenovo has now entered into a definitive agreement with Google under which Lenovo plans to acquire the Motorola Mobility smartphone business.  Google Inc. is hanging up on its Motorola Mobility unit and is selling its smartphone division to Chinese PC maker Lenovo for $2.9 billion.

The deal marks one of the worst investments for Google. In 2012, Google completed its acquisition of Motorola Mobility for $12.5 billion. At that time, the primary reason thought was to gain the treasure trove of Motorola patents, which would help Google defend it and its partners against Apple. The patents, however, have proven to be less than effective in warding off lawsuits, and much of the legal fighting as gone on between Apple and Samsung, with Google only creatively related.

Lenovo, meanwhile, could conceivably jump-start its smartphone ambitions with the purchase of Motorola. As the inventor of the cell phone, Motorola has a rich legacy and a still well-known brand that Lenovo could exploit.

This agreement between Lenovo and Google will provide Lenovo a strong market presence in North America and Latin America, as well as a foothold in Western Europe, to complement its strong, fast-growing smartphone business in emerging markets around the world. The deal instantly gives Lenovo, which has a thriving smartphone business in China but few other places, an established global brand. Google, meanwhile, will shed a business that has continually dragged down its profits.

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.

The smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices,” Page said in a written statement. “This move will enable Google to devote our energy to driving innovation across the Android ecosystem.” Lenovo is picking up about 2,000 Motorola patents in addition to the phone manufacturing operations.

 

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