Early Thursday morning or late Wednesday afternoon—depending on which part of the world you’re located—Google rather unexpectedly sold to Lenovo its smartphone business. The amount of the sale is a tidy $2.91 billion. But don’t let the amount fool you. It is good that Google will be getting some money, but it is a far cry from what it originally spent in buying Motorola. Then again, the whole point of the exercise is to let go a business segment that Google thinks should be left to other players. Google admitted to its employees that the smartphone space is ultra-competitive and rather be the provider of the OS than one of the players in the field.
Enter the saving grace
Lenovo comes out from the dark and dares to rescue a brand from further harm. We all know how big Motorola was before. At least for people that are over 30 years old—they know what Motorola brought to the table before the iPhone. The StarTac was the iPhone of its time and people ogled and drooled at the sight of Motorola’s phone back in the late 1990s and early 2000s. But things have changed, Motorola made a crucial blunder that cost a lot in the process—since then it has been all downhill with Motorola and with the launch of the original iPhone all things went south—further south.
Lenovo is smiling right now
Lenovo bought a company that was originally bought for $12 billion for just almost $3 billion. That is about $9 billion in savings—and for people that are not that accustomed to seeing that much money—it is a lot. Lenovo is on a buying binge right now. The Motorola acquisition is the second big transaction by Lenovo this year. Earlier this year, Lenovo bought the small-end server business of IBM. The writing on the wall is clear, Lenovo—being a Chinese manufacturer—is poised to make a bigger impact in the lucrative American market. This is something that other Chinese OEMs are struggling to do following a crackdown on the use of Chinese-made networking gear in the US for privacy concerns.
Lenovo gets what it wants, a solid company that has been previously in American roots. What remains to be seen in the next few days or years, perhaps is if Motorola still got what it takes to be relevant. In a smartphone space dominated by Apple and Samsung—all other OEMs struggle for survival, just ask Blackberry. That is why it remains to be seen if the Motorola purchase is indeed profitable for Lenovo or if it will turn out that Google just sold the London Bridge to the Chinese.