Lenovo has signed a deal to buy the loss-making Motorola Mobility smartphone manufacturer for $2.91bn, but a switched-on Google is keeping the patents owned by the firm it gobbled two years ago for $12.5bn.
"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," said Lenovo's CEO Yang Yuanqing. "We will immediately have the opportunity to become a strong global player in the fast-growing mobile space."
Beijing-headquartered Lenovo has made no secret of the fact that it would like to buy an established smartphone vendor in the US and European market. While Lenovo has been growing strongly in the Chinese domestic market, the company has little presence in the Western sector, which is largely sewn up between Apple and Samsung.
According to the latest data Lenovo is the fifth-largest smartphone seller in the world, with 4.5 per cent of the market. Another half a per cent increase would take it to the number three position, and another ten to second after overtaking Apple. That's not possible without getting serious presence in markets where people buy smartphones often and at a high price.
"As part of Lenovo, Motorola Mobility will have a rapid path to achieving our goal of reaching the next 100 million people with the mobile Internet," said Dennis Woodside, CEO of Motorola Mobility. "With the recent launches of Moto X and Moto G, we have tremendous momentum right now and Lenovo's hardware expertise and global reach will only help to accelerate this."
But while an established brand (who didn't have a RAZR ten years ago?) Motorola's mobile arm has been making losses for years, and the value of the company is now largely predicated on its patent portfolio. Motorola built the first commercial mobile phone back in 1972 and has amassed a large stash of intellectual property that Googorola is now using to try and get royalties from.
That legal jamboree looks set to continue. Under the terms of the deal Google keeps almost all of Motorola's intellectual property, although Lenovo will get a bundle of around 2,000 patents from the deal. It will also have the licensing rights to the remaining IP, and Google indicated that it was looking forward to adding a new Android adherent.
"Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem," said Larry Page. "This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere." ®