Google sold the remnant of Motorola’s mobile phone operations to Lenovo yesterday, getting the world’s dominant mobile OS company out of the business of making mobile phones. This is a good move for Google and a good move for Lenovo, although it may not be a good move for consumers. Here’s why Google and Lenovo are both walking away from the deal happy.
Why Google Sold Motorola 1. Google’s mobile strategy is to get Android onto as many phones as possible, as almost all of the company’s revenue comes from advertising, including on mobile devices. This is very different from Apple, BlackBerry, and Microsoft, which are all now integrated hardware-software businesses.
2. Google wanted Motorola for the patents, not for the manufacturing. Apple’s patent attack on Android licensees was slowing down and worrying Google’s customers. Motorola had a massive patent library that can be used defensively.
3. Once Google bought Motorola, some of its major licensees started hedging their bets and developing or buying their own non-Google OSes: Samsung with Tizen and LG with WebOS, for instance. They were worried Google would compete directly with them.
4. Motorola never made Google any money.
5. By ditching Motorola, Google can be a neutral, honest broker of operating systems to the world and make money doing so.
Why Lenovo Bought Motorola 1. Lenovo is one of the world’s top five smartphone makers, but its market share in the U.S., one of the world’s largest smartphone markets, is zero. Motorola has an 85-year history in the U.S. and, at this point, pretty poor distribution elsewhere.
2. The company’s biggest business is still PCs, and it’s the world’s No. 1 PC maker. But PC sales aren’t growing. If Lenovo is going to be a technology leader in the late 2010s, it needs to be a mobile tech leader. Assembling a global smartphone business is key.
3. Lenovo has experience integrating and running U.S.-based technology companies. It bought the ThinkPad business from IBM and led it to success, and it now has a manufacturing plant in Whitsett, N.C. making Think-branded products.
4. Getting into the U.S. market is all about relationships with U.S. carriers. Motorola’s relationships are really, really good: it has the ongoing Droid deal with Verizon Wireless, and it’s placed the Moto X on three out of our four national carriers.
5. Lenovo doesn’t just want to be a consumer smartphone maker. It has very strong enterprise relationships with its ThinkPad and ThinkCenter products, and it just bought IBM’s low-end server business. By now also offering phones, it can deliver full technology packages to its U.S. business clients.
For more, check out PCMag Live in the video below, which discusses the Motorola sale.