In the first month of 2014, tech news has been dominated by one company. Google. It began with the surprising acquisition of Nest Labs on Jan. 13 for $3.2 billion, then it bought AI start-up DeepMind, earlier this week news came out that Google has cozied up with Samsung and now Google closes out the month with the announcement that it has sold Motorola Mobility to Lenovo for $2.91 billion.
Google first acquired the Illinois-based telecommunications company in 2012 for $12.5 billion dollars, and at the time it stated its interest was primarily in Motorola’s patent portfolio. In the years since the purchase, it has become known that Mountain View grossly overestimated the worth of Motorola’s patents, which it had originally thought could be used to block certain products, such as the iPhone, from the market. That’s not how it worked out. In every instance, courts ruled against Motorola’s patent claims and the oft boasted about portfolio became virtually worthless. All the while, Motorola was continually unprofitable quarter after quarter.
Yet, under the guidance (and hefty pocketbook) of Google, Motorola seemed to turn itself around. It released two highly regarded phones in the Moto X and G and its close ties to the company behind Android had many very interested in where Motorola was headed. Neither handset sold well, however, and in his statement about the sale, Google CEO Larry Page noted that “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 could signal, along with the recent purchase of Nest, that Google is no longer interested in manufacturing its own phones. Further, the agreement between Samsung and Google could be a sign that Google has no desire to compete with its Android manufacturers, which could have interesting implications for the Nexus line.
What does Lenovo get? A smartphone company in the US that is on the cutting edge of both software and hardware design. Lenovo controls 5.1% of the worldwide smartphone market, but that is primarily in China and other areas of the world. Ultimately, it seems like a win-win-win scenario, which is increasingly rare in an industry dominated by just a few massive corporations.
The deal has yet to be approved in either the United States or China, and it might be a while before it is—but for now, it looks like Motorola has a new home.