Sometimes, you cannot really judge how acquisitions will perform and work for you. While there may be opportunities, it is very difficult to try and get them to succeed. Maybe it is the lack of focus and vision on a particular business niche that may lead to downfall. The same case may be in many people’s minds after hearing that Google is selling its Motorola Mobility business to Lenovo.
Official news reports say that Google has sold its Motorola Mobility unit to Chinese computer maker Lenovo. Reports say that the deal is worth around $2.91 billion. Google will get $660 million in cash and $750 million in Lenovo shares. The remaining $1.5 billion will be paid in the form of a promissory note to pay the remainder of the amount in a period of three years.
The selling amount is way below the amount that Google paid for acquiring Motorola in 2012. The online search giant coughed up $12.5 billion for the said deal. The initial objective of the deal was said to target the treasure trove of patents that come with acquiring Motorola. During that time, Google was at risk of being a target for lawsuits against rival companies out to take hole of the smartphone market.
Google believed that the company and its partners will acquire some level of protection from lawsuits when it acquired Motorola. But the collection of patents were not that effective in warding off the lawsuits. And the relevance of the patents may no longer be that important, now that Google and Samsung have also inked a cross-licensing deal recently.
When it comes to handsets, this is where Motorola may have become a burden for Google. While the mobile phone market may be very popular, there is cutthroat competition among the different manufacturers to make a dent in the eyes of consumers. Many big companies have tried to gain entrance and yet have failed miserably. One such company may be Google. The online search giant is trying to gain a foothold in the mobile phone market after it has introduced a very popular mobile phone operating system in Android. But despite their progress, they still have not positioned themselves as a known smartphone market player.
One reason for this is because of Google’s open source Android OS for mobile phones. The popularity of the Android platform has led to Google collaborating up with other smartphone manufacturers to come up with Android handsets for the consumer market. The fact that Google intended to create their own mobile phone may not have sit well with its other partners. This put Google in a very sensitive situation and may have delayed the progress of its planned handset business with Motorola.
Over the course of two fiscal years, losses as a result of the Motorola acquisition have been a problem for Google’s financial bottom line. The increased losses in the recent quarter may have made Google decide to let go of the acquisition. In addition, coming into the hands of Lenovo may be seen as an opportunity for the Chinese company to make some headway in the global mobile phone market.
With the acquisition of Motorola Mobility, Lenovo is getting a globally known brand that will help them improve their opportunities in entering many international markets. While Lenovo smartphones may have been quite popular in the Chinese market, the brand has not’ really taken off globally. Having Motorola in its fold along with its current lineup of consumer products may help Lenovo gain some foothold into a tricky and highly competitive international market. Consider it a gain for Lenovo and a loss for Google.