Google announced Wednesday it was selling its Motorola
Mobility smartphone unit to Lenovo for about $2.9bn, just two years after the
search giant snapped up the company in its largest ever deal.
Google paid $12.5bn for
the Moto X and Moto G smartphone manufacturer in 2011. The acquisition,
Google’s largest by far, came after Larry Page, Google's co-founder, took back
day-to-day running of the company. Lenovo will pay $660m in cash, $750m in Lenovo
shares, plus a $1.5bn three-year promissory note.
While the purchase was
seen as a strategic move to build Google's mobile business it has been
unpopular with shareholders and analysts. Motorola has continued to lose money
and sales of its new flagship phone the Moto X have disappointed.
The sale looks like a
major embarrassment for the company and Page. But while it is jettisoning the
mobile manufacturer it will keep the vast majority of the 17,000 Motorola
Mobility patents it acquired with the purchase. Patents have become a key
battleground among tech firms – especially in mobile. Lenovo will keep some
patent assets and the Motorola Mobility brand and trademark.
In a blog post Page said
Dennis Woodside, a former Google operations executive and Motorola's CEO had
done “a tremendous job reinventing the company.” He said the company had helped
Google's Android operating system create a “level playing field” with its
rivals.
“But 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. This move will
enable Google to devote our energy to driving innovation across the Android
ecosystem, for the benefit of smartphone users everywhere,” he wrote.
The sale comes as Google
has turned its energies towards hardware as well as software products. The
company is working on Google Glass, its wearable computer, a smart watch and
driverless cars as well as tablets and laptops. Earlier this month it bought
Nest, maker of smart home devices like smoke alarms and thermostats for $3.2bn.
Page was at pains to point out the Motorola sale was not a radical change of
tack.
“As a side note, this
does not signal a larger shift for our other hardware efforts. The dynamics and
maturity of the wearable and home markets, for example, are very different from
that of the mobile industry. We’re excited by the opportunities to build
amazing new products for users within these emerging ecosystems,” he wrote.
This is the second sale
Google has made of assets it acquired after buying Motorola Mobility. In 2012
Google sold Motorola Home, which made set-top boxes and cable modems, to Arris
for $2.35bn.
Lenovo is already the
world's largest PC manufacturer, has been expanding into other areas. This is
Lenovo's second large buy of the month. Last week the Chinese company paid
$2.3bn for IBM's server business. It bought IBM’s laptop business in 2005.
“We will immediately have
the opportunity to become a strong global player in the fast-growing mobile
space,” Yang Yuanqing, Lenovo’s chief executive, said in a statement. “We are
confident that we can bring together the best of both companies to deliver
products customers will love and a strong, growing business.”
SOURCE: theguradian
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