Motorola is once again newly-owned by another company because of its troubled smartphone business, as Google has sold the company to PC maker Lenovo for $2.91 billion.
The smartphone world is a tough market and its two main players have basically made it nearly impossible for others to truly prosper. Apple and Samsung keep turning out hit after hit, while companies such as HTC, Nokia, LG, and Motorola have struggled to make a dent in the smartphone market.
As smartphones grew in popularity and Google watched Apple and Samsung own the market, it decided that it wanted a piece of the action. Google announced that it entered an agreement with Motorola to acquire the company for $12.5 billion in 2011, making its biggest acquisition ever. Google instantly had its own smartphone company and a very large patent portfolio accompanying it. Google allowed Motorola to retain its name but rebranded it as "A Google Company".
The two companies worked together on both the Moto X and Moto G. The Moto X was hyped for months before it was released, and many claimed it would be more innovative than anything Apple or Samsung could produce. The smartphone, however, has never lived up to those ambitions and Motorola was losing tons of money for Google every quarter. In a move to stop that loss, Google announced plans that seem to make it clear that it wants to wash its hands of Motorola and will take one more money losing hit.
Google announced that it has entered a deal with PC manufacturer Lenovo to sell the Motorola Mobility smartphone business for $2.91 billion, a steep loss compared to the $12.5 billion Google paid in 2011. Google and Lenovo announced the news in a press release.
"Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere," said Larry Page, CEO, Google.
"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. We will immediately have the opportunity to become a strong global player in the fast-growing mobile space," said Yang Yuanqing, chairman and CEO of Lenovo. "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. 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."
Google's sale of Motorola to Lenovo still allows it to keep all the patents it acquired when it purchased the company. Google also made it clear that this does not signal a larger shift in its hardware efforts. It believes that wearables and home markets are very different from the mobile industry, and with its recent Nest acquisition and Google Glass, the company seems less focused on actually building smartphones. Of course, it will still supply Android, it just won't be building or losing money on Motorola anymore.
