Home Page ContentPress Releases Lenovo Becomes 3rd Largest Handset Vendor – Buys Loss-Making Motorola from Google

Lenovo Becomes 3rd Largest Handset Vendor – Buys Loss-Making Motorola from Google

by david.nunes

Lenovo Becomes 3rd Largest Handset Vendor – Buys Loss-Making Motorola from Google

The Analyst Perspective: Oliver Rowntree, Market Analyst, Futuresource Consulting

Google has announced its intention to sell Motorola Mobility to Lenovo for $2.9 billion.

Google acquired Motorola for $12.5 billion in 2011, along with their $2.9 billion cash reserve, and sold Motorola’s set-top business to Arris Group for $2.24 billion in 2012, making a net loss of around $4.5 billion. One of the greatest benefits to Google of the initial acquisition was Motorola’s patent portfolio, the vast majority of which Google will retain.

Lenovo’s acquisition of Motorola, which has been in a consistent decline in recent years, will make the PC manufacturer one of the largest smartphone brands in the world, with a combined global market share of around 6% in 2013, placing it in third place behind Samsung and Apple. Lenovo has become a strong player in the global smartphone market with its range of affordable Android handsets. However, its growth has been largely limited to China and South East Asia, while it has had little success in the more penetrated US and Western European markets.

By taking over Motorola, Lenovo gains a well-recognised brand in these markets – albeit with a declining presence – which it can leverage to build its market share. Significantly, Lenovo will gain Motorola’s engineering, distribution and channel management – key success factors in a market where a vendor’s success depends upon its relationship with operators, which account for around 90% of handset sales.

There is a precedent for Lenovo using the acquisition of known brands to break into new markets, as in 2005 it purchased ThinkPad – IBM’s declining PC brand – which it has used to become the largest global PC brand. Lenovo was also rumoured to be considering purchasing BlackBerry and Nokia – which was instead acquired by Microsoft – with which it could have pursued a similar strategy

Google’s sale of Motorola may also be an effort to reinforce its relationship with its OEM partners, who have been uncomfortable with Google acting as a competitor through Motorola. Google and Samsung’s patent cross-licensing deal demonstrates a move by the companies towards closer cooperation.

About Futuresource Consulting
Futuresource Consulting is a specialist research and knowledge-based consulting company, providing organisations with insight into consumer electronics, digital imaging, entertainment media, broadcast, storage media, education technology and IT. With a heritage stretching back to the 1980s, the company delivers in-depth analysis and forecasts on a global scale, advising on strategic positioning, market trends, competitive forces and technological developments. www.futuresource-consulting.com.

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