Possibly the biggest news of this year so far. Just three years back google had purchased Motorola Mobility for a modest sum of $12.5Billion. Everyone had speculated that google was very serious about getting into the handset business, but three years down the line we haven't seen google do much.
Probably it was never interested in making handsets at all. Insiders say that google was just wanted the patents in the field that Motorola had owned.
Google is now selling off Motorola to the Chinese Multinational Lenovo for one fourth of the original price. For a reported $2.91Billion. Lenovo currently is very successful in the Desktop and laptop market. Lenovo had acquired the business from IBM in 2005. Lenovo also has entered the smartphone market but has not found much success. This move comes as Lenovo's bid to capture the elusive North American smartphone market.
As far as google goes it now effectively owns Motorola's patents for $7billion. The initial acquisition was for $12.5 billion. Google had earlier sold of Motorola's Set-Top division, Motorola Home, for $2.5billion.
Google will lease those licences to Lenovo but retain the ownership. It will add to the already massive collection of patents owned by the web search giant.
Lenovo had found great success in the laptop market, as it used IBM's Thinkpad brandname to gain the markets globally. It did not change a single thing about the laptops, including the tiny red button on the keyboard which doubles as the mouse. Something seen only on IBM(now Lenovo) thinkpads. Can Lenovo create a similar wave with motorola? Experts think so.
"Using Motorola, just as Lenovo used the IBM ThinkPad brand, to gain quick credibility and access to desirable markets and build critical mass makes a lot of sense," said Forrester Research analyst Frank Gillett.
"But Motorola has not been shooting the lights out with designs or sales volumes in smartphones. So the value is simply in brand recognition to achieve market recognition faster - and to expand the design and marketing team with talent experienced at U.S. and Western markets."
We will be keeping a close eye on this deal in the coming weeks. Make sure to check this space for more.
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