In a move that caught many off guard, Google has announced that it is to sell Motorola to Lenovo for just short of $3 Billion. Google acquired Motorola in a somewhat surprise move for $12.5 Billion in 2011. While the initial figure seemed huge for a loss making company, the most obvious reason Google parted with its cash was for Motorola’s 17000 patents.
Google quickly offloaded Motorola’s set top box division for $2.05B. Even though this was an area that people initially presumed would have been used to facilitate pushing Google TV into people’s living room, the quick sale strengthened the belief that Google was only after Motorola’s patents.
While Motorola has continued to lose money every quarter since, they have been going through a process of reinvention. Google disposed of the old management and put their own people in charge. The smartphones being produced took on a more Nexus resemblance in both price and software and probably most importantly, people’s perception of Motorola has begun to change favourably.
The Moto G and the Moto X are proving to be very popular phones. Things certainly seemed to be on the up for Motorola which is why some people may be surprised to see Google sell it off. Many are also reporting this as a failure for Google but I wouldn’t be so sure of that. They got exactly what they wanted when they purchased the large portfolio of mobile patents. Not all of these patents turned out to be the weapons that Google may have believed they were buying, but they were involved in a pretty petty scrap at the time and a catalog of patents this big seemed almost like good value then. They’ve regained $5B of the purchase price now and will continue to earn some income from licensing the patents for years to come. Some might say it has worked out reasonably well for Google. They have never been afraid of spending large amounts of money only to shut down the very service they were investing in when it doesn’t deliver what they wanted. The hope is of course that one of these investments will turn out to be a “moon shot” and the recent purchase of Nest seems to be Google’s next gamble.
Lenovo for their part now hopes that by purchasing Motorola they can make the same charge in the mobile device field as they have in the computer market. With an already established presence in the China purchasing Motorola will help them sell their products through a well known brand in the rest of the world.