Google has sold Motorola Mobility smartphone business for a mere $2.9 billion to Chinese handset and PC maker, Lenovo. It's the most shocking deal of the year, considering Google bought the company for $12.5 billion less than two years ago.
Larry Page, CEO of Google, classified the sale of Motorola to Lenovo as an "important move for Android users". However, it is not certain how important this move is, and how it would eventually benefit the Android platform and its users in the long term.
"The smartphone market is super competitive and to thrive it helps to be all-in when it comes to making mobile devices," Page said.
"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.
"This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere," he said.
However, before you go thinking that Google may have gone mad by selling Motorola for nearly $10 billion less than what it acquired the company for, note that the search engine giant won't be handing over everything Motorola-related to Lenovo. Per the deal, Google gets to keep the vast majority of Motorola's patents, while licensing 2,000 patents to Lenovo. The deal will see Lenovo paying Google $750 million in stock, and $660 million in cash, while the $1.5 billion remaining will be paid over within the next 3 years.
"Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem," Google CEO Larry Page said in a statement. "This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere."
Google's deal with Lenovo makes it clear now that the main reason Google acquired Motorola Mobility was because of the patents and Google, in fact, didn't care much about the hardware business. However, that huge patent portfolio did not do much in helping the search engine giant fend off rivals, such as Apple, as the company had initially hoped. Anyways, Google should feel relieved now, as the entire ownership of Motorola was a problem that needed some serious fixing, which is something Google was not interested in doing.
The deal is being seen positively by investors. Google's stock was up 3.19 percent at $1,142.21 on the NASDAQ during morning trading session.
One man's gain is also another man's gain
The deal is a win-win because, for years, Lenovo has been interested in breaking into the U.S. market and with Motorola now under its belt, this vision can now be accelerated.
"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," Lenovo CEO Yang Yuanqing said in a statement. "We will immediately have the opportunity to become a strong global player in the fast-growing mobile space.
"We are confident that we can bring together the best of both companies to deliver products customers will love and a strong, growing business. Lenovo has a proven track record of successfully embracing and strengthening great brands - as we did with IBM's Think brand - and smoothly and efficiently integrating companies around-the-world," said Yuanqing. "I am confident we will be successful with this process, and that our companies will not only maintain our current momentum in the market, but also build a strong foundation for the future."
It will be interesting now to see if Lenovo continues to use the Motorola branding, or scrap it altogether.