Yesterday we woke up with the new that Google just sold Motorola Mobility to the chinese PC maker Lenovo for 2,91 billion dollars. A surprising operation considering that Google bought the iconic handset maker for 12,5 billion in 2011. Google published a blog post where they explain the reasons behind this movement, however we think there may be more issues to be considered in order to understand this operation.
- Google-Samsung patents agreement. Samsung and Google just sign a patent agreement where they state a new situation of collaboration between the two giants in the next decade. Why is this important when talking about the selling of Motorola? Because this collaboration agreement shows how important Google consider Samsung in the Android devices business, Google do not want to fight with the main manuacturer of Android phones. Event though Google assured Motorola would received same treatment as any other manufacturer, this seems hard to believe when a ex-googler became CEO of Motorola and the investment of 12,5 billion dollars.
- Google just wanted Motorola patents. From the beggining Google declared that their main interest in Motorola was its intellectual property, 17,000 issued patents and 7,500 applications. Google already has take advantage of this patents in the patents war between tech giants like Apple, Samsung or Google. After the patents agreement between Google and Samsung this war seems cooling down and anyway Google keeps most part of the patents.
- Hardware is not an easy business. Google is really in the hardware business and Motorola was a part of this strategy. However, the main business of Google is its services and Motorola and the Nexus line seems to be more part of this strategy to spread Google services than a business itself. Therefore putting in risk the relationship with Samsung when selling hardware devices is not a key factor in your business may not be best strategy. After the Lenovo-Google agreement, Android industry has Samsung as its main player and Lenovo can be a strong competitor in this market market, as they shown in the PC market. As a result, Android has a more diverse and competitive market than in 2011 when Google bought Motorola and this is a much better situation for the giant of Mountain View.
- A waste of money? Google bought Motorola for 12,5 billions and is selling it for 2,91 billions, some people is saying that Google just lost 9,59 billions. This is not totally true as some other issues should be considered. Motorola had 3 billions cash on-hand, this reduce the 9,59 billions to 6,59 billions. At the end of the day Google paid 6,59 billions to get Motorola’s patents. This may seem too much but we should consider that Nortel patents were sold for 4,5 billions. In addition to this, Google had saved some money thanks to Motorola in terms of taxes. Motorola has not been the best Google’s business but it is not as bad as it looks. Another thing we can not obviate is Google’s cash flow, some billions of dollars are not a big problem for them.
Taking in consideration the issues mentioned above we can have a better understanding on why Google just sold Motorola Mobility. Now is time to see what is the next move in mobile industry ad how the irruption of Lenovo as a Handset maker changes the panorama of the industry.
What is your opinion about Motorola’s sale?