Google announced its agreement to sell Motorola Mobility to Lenovo for $2.91 billion in a blog post today.
The sales price is a significant cost cut compared to the $12.5 billion Google agreed to pay in August 2011. The price tag includes $1.41 billion paid at close—containing $660 million in cash and $750 million in Lenovo ordinary stock; the additional $1.5 billion will be paid in a three-year promissory note, according to Lenovo’s official press release. However, Google isn’t severing ties completely. The search engine giant will still possess most of Motorola’s patent portfolio; Lenovo will receive a license to the patent and intellectual property portfolio, as well as more than 2,000 patent assets, the Motorola brand, and the company’s trademark portfolio, the release states.
Lenovo made strides in the mobile category this past year, including introducing its tablet/laptop creation, the Yoga.The company’s CEO, Yang Yuanqing, says he’s confident that Lenovo and Motorola will leverage each other’s strengths and integrate smoothly, similarly to how Lenovo acquired IBM’s PC “Think” brand back in 2005.
“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,” Yuanqing, stated in the release. “We are confident that we can bring together the best of both companies to deliver products customers will love, and a strong, growing business.”
Google first announced its plan to acquire Motorola back on August 15, 2011 and officially sealed the deal on May 22, 2012. The motivation behind the acquisition was to “supercharge the Android ecosystem,” which Google purchased in August 2005, by building a robust patent portfolio for Google and a strong line of smartphone devices for the public, Google CEO Larry Page stated in the January 29, 2014 blog post. And although Page commends Motorola Mobility CEO Dennis Woodside and his team for doing “a tremendous job reinventing the company” and for introducing products like the Moto G and Moto X, it doesn’t seem like the mobile company’s efforts were enough.
“The smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices. It’s why we believe that Motorola will be better served by Lenovo—which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world,” Page stated in the post.
Motorola’s plummeting performance has hinted toward a separation for some time. This past October Google revealed that its Motorola Mobile segment revenues fell from 1.78 billion in Q3 2012 to $1.18 billion in Q3 2013.
With Motorola out of the mix, Google intends to innovate across Android, Page states. However, he says that this decision doesn’t signal a more central focus on hardware.