Google’s Motorola deal shows tech giant is happy to just be the platform
Google’s Motorola deal shows tech giant is happy to just be the platform
Google announced on 29 January 2014 that it is selling its Motorola Mobility cell phone unit to China’s Lenovo Group for 2.91 billion US dollar – less than two years after it paid 12.5 billion US dollar for the company. Analysts said that the deal did not represent much of a loss for Google, since it will keep the majority of Motorola’s patents. It also pocketed 2.9 billion US dollar of Motorola’s cash when it originally acquired the company.
By Hayley Tsukayama, Friday, January 31, 1:36 AM E-mail the writer
A little more than two years ago, Google surprised the world by announcing it would acquire Motorola Mobility in a $12.5 billion deal that would provide it a rich patent portfolio and ramp up its rivalry with Apple.
On Wednesday, the company made an equally surprising announcement: It’s selling the smartphone manufacturer to Lenovo for $2.9 billion.
Just this past summer, the firm was shouting from the rooftops about itscustomizable Moto X
, the first Motorola phone imbued with Google goodness. So what’s up with the quick U-turn?
In a blog post on the deal, Google chief executive Larry Page said splitting Google and Motorola allows both to fully pursue their goals for the smartphone market. For Motorola, that’s making phones. For Google, that’s building Android.
The sector is “super competitive, and to thrive it helps to be all-in when it comes to making mobile devices,” Page said. “This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere.”
In other words, Google is perfectly happy being the provider of the world’s largest mobile operating system, thank you very much. Rather than take a leaf from Apple’s end-to-end manufacturing playbook, Google’s content to take one from Microsoft’s heyday for its smartphone strategy instead.
After all, it’s hard to be a platform partner and a competitor. Just as Microsoft is walking a fine line between promoting its hardware products and annoying Windows PC manufacturers, Google always had to be mindful of how it propped up Motorola.
That cautious relationship means this won’t be a difficult separation, said Andrew Costello, a principal with IBB Consulting.
“Google treated Motorola at arm’s length,” he said. “They didn’t integrate it into its core Android team, and that prevented it from being the success that a lot of people had hoped.”
It’s not as Google gets nothing from the deal. It will retain the bulk of patents it picked up in the Motorola deal. Some critics of the deal said that’s all the Motorola acquisition was good for, anyway — that Google should have just taken the patents and run.
But Google showed it was serious about its smartphone effort, and put considerable time and effort into producing the Moto X and Moto G. Despite that push, Motorola was still not making Google any money.
That alone makes it difficult not to see this as a misstep by the company and by Page, whomade an eloquent case for the acquisition in 2011.
It’s important to note, however, that while Google is exiting the competitive — and increasingly less lucrative — smartphone hardware market, it hasn’t abandoned its general plans to make hardware. Google tablets, wearable devices and gadgets for the home will continue to be a priority, Page said.
“We’re excited by the opportunities to build amazing new products for users within these emerging ecosystems,” he wrote.
For Motorola, a pioneer in the cellphone industry, the Lenovo buy provides an uncertain future. The Chinese firm will keep the Motorola brand to leverage the strong brand associations the company still has, particularly with American consumers. But the brand could fade over time. Lenovo licensed the “IBM ThinkPad” name from IBM when it bought the iconic laptop line in 2005 but eventually rebranded it as the Lenovo ThinkPad.
It’s pretty clear that Lenovo will use the Motorola brand for a while as it ramps up its efforts to transition from a PC firm to a mobile company. But, eventually, Costellos said it’s likely that if Lenovo manages to carve out a piece of the market, it will “try to leverage that back over to the Lenovo brand.”
So it may be a little while off, but don’t be surprised if you see ads for a “Lenovo RAZR” down the line.
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