Less than two years after acquiring it, Google is ditching Motorola. Chinese electronics maker Lenovo is buying the hardware firm for $2.91 billion.
The acquisition gives Lenovo access to upwards of 2,000 mobile communications patents, and a much larger footing in the smartphone and tablet space, particularly in the U.S. and Europe.
The loss of Motorola doesn't necessarily mean Google will be exiting the hardware space, though. The company has successfully partnered with a variety of hardware makers on its flagship products, including Asus for the Nexus 7 tablet and LG for the Nexus 5. And with Google's recent acquisition of smart thermostat maker Nest, it's still got a hardware maker onboard. Throw in another recent cross-licensing deal with Samsung, and Google has a whole lot of mobile-related IP it can use, too.
Google's official press release sheds more light on the intellectual property situation post-acquisition: "Google will maintain ownership of the vast majority of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures. As part of its ongoing relationship with Google, Lenovo will receive a license to this rich portfolio of patents and other intellectual property. Additionally Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio."
Google originally finalized the acquisition of Motorola Mobility for $12.5 billion in May of 2012. However, between selling off Moto's set top division, Motorola's $3 billion in cash and $1 billion in tax credits, and the value of its intellectual property to Google, selling Motorola may not have been a loss for Google at all. But while the partnership with Motorola produced phones like the Moto X and Moto G, the unit was never profitable for Google. Motorola operated at a $248 million loss during the third quarter of 2013, and $192 million the year before.
In a blog post further explaining the reasons behind the sale, Google said: "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."
Google, of course, has never been "all-in," when it comes to smartphones. Instead it has successfully made phones with numerous industry partners over the years. In this light, the decision to cut its losses and redirect focus to Android makes some sense. For its own part, Lenovo also has had a decent track record of strategic purchases. It 2005, it bought IBM's personal computer business for $1.25 billion, making it the third largest PC maker in the world. Just last year it overtook HP as the largest.
We'll see if it can do the same thing with Motorola and smartphones.
Updated 2:05 PM PT with the official announcement from Google.
