2 years back Andy Rubin, Senior Vice President of Mobile and Digital Content at Google, announced that Google is acquiring Motorola Mobility in $12.5 billion. Deal was seen as a Google’s attempt to safeguard Android ecosystem from the patent war with strong patent portfolio of Motorola Mobility. And for Motorola, Google came as white knight. At that time, the company had registered its 5th consecutive quarter loss. The engagement was formally formed after an year of declaration. Google had already sold the Motorola set-top business to Arris for around $2.35 billion. And now Google has sold Motorola Mobility to Lenovo in $2.91 billion saying it would help the Lenovo and Motorola in their path of innovation.
Earlier there were reports that Lenovo was keen to acquire HTC. The advantage of having Motorola over HTC is that its valuation is around $1 billion lower than HTC. Lenovo will also have a relationship with android makers which could give the company a strategic advantage over others. Benefits for Lenovo is that the Motorola still have its strong presence in US and has footprints in western Europe and other Latin American nations which will allow company to expand geographically. The deal will strengthen Lenovo portfolio as it would make them second biggest in terms of product line and third largest smartphone vendor. For Google, they can now concentrate more on its Android ecosystem that will benefit everyone everywhere.
Of course, there is some math behind what happened in the span of two years. Let me throw some light on the facts that will show why deal is not so bad from Google’s point of view:-
- When Motorola mobility joined Google it had $3 billion cash in hand & 1 billion tax credit.
- Sold Motorola’s Set-Top operations to Arris Group Inc. in $2.35 billion.
- Google has already kept key patents to safeguard its Android Operating system.
- Even Project Ara modular phone concept will be left behind for Android team.
Now selling the rest except some important patents to Lenovo in a deal around around 3 billion dollar. Economy sums up that Google has lost around $3-3.5 billion but it would be tough to evaluate the price of patents which will help Android ecosystem to grow. Though the deal would materialize in an year as they need clearance from US and China. Surely for now deal would benefit both Google and Lenovo. But we have to see how Lenovo take advantage of Motorola hardware expertise to grow as a strong device manufacturer across markets.
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