|GOOGLE WANTS TO FOCUS ON ANDROID, SELLS MOTOROLA TO LENOVO FOR $2.91 BLN|
Aruba, January 30, 2014 - CEO Larry Page says Google wants to focus on Android and believes Motorola will be “better served” by Lenovo in the “super competitive” smartphone market. Google will continue its investments in other hardware such as wearables and smart home devices.
After a brief foray into the smartphone device business, Google CEO Larry Page announced that the company is selling its Motorola Mobility division to China’s Lenovo for $2.91 billion so it can focus instead on its Android mobile operating system software and the new wave of smart devices.
Motorola Mobility was Google’s largest ever acquisition at $12.5 billion in 2012. Page says the decision was made because of the “super competitive” nature of the smartphone market. “Motorola will be better served by Lenovo—which as a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world,” Page said today. “This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere.”
Google Bids Goodbye To The Smartphone Business With $2.9 Billion Motorola Sale
The sale doesn’t mean that Google isn’t interested in making hardware to run Android.
Earlier this month, Google spent $3.2 billion to acquire smart thermostat maker Nest and bought several robotics companies last year. Page made a point of noting that Google’s vision for smart devices like the Nest and Google Glass, its Internet-connected eyewear, remains a focus for the company.
“As a side note, this does not signal a larger shift for our other hardware efforts,” he said. “The dynamics and maturity of the wearable and home markets, for example, are very different from that of the mobile industry. We’re excited by the opportunities to build amazing new products for users within these emerging ecosystems.”
Page also said Google will “retain the vast majority of Motorola’s patents, which we will continue to use to defend the entire Android ecosystem.” The company valued those patents and other developed technology at Motorola at $5.5 billion, according to a regulatory filing last year.
(In terms of whether Google has lost money on the deal, the New York Times and others note that Motorola had about $3 billion in cash on hand and $1 billion in tax credits when it was acquired, reducing the effective purchase price to about $8.5 billion. Google also sold Motorola’s set-top business to Aris for nearly $2.4 billion. With the sale to Motorola and the value of the patents, which it has used as a strategic asset to protect the Android ecosystem, Google seems to have fared better than you may think.)
Google investors are happy with the news, sending the shares up in late trading. They’re up 2.6 percent, or $28.28, to $1,135.20 at 5:38 p.m. New York time.
Here’s what Page had to say about the deal:
We’ve just signed an agreement to sell Motorola to Lenovo for $2.91 billion. As this is an important move for Android users everywhere, I wanted to explain why in detail.
We acquired Motorola in 2012 to help supercharge the Android ecosystem by creating a stronger patent portfolio for Google and great smartphones for users. Over the past 19 months, Dennis Woodside and the Motorola team have done a tremendous job reinventing the company. They’ve focused on building a smaller number of great (and great value) smartphones that consumers love. Both the Moto G and the Moto X are doing really well, and I’m very excited about the smartphone lineup for 2014. And on the intellectual property side, Motorola’s patents have helped create a level playing field, which is good news for all Android’s users and partners.
But 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 has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere. As a side note, this does not signal a larger shift for our other hardware efforts. The dynamics and maturity of the wearable and home markets, for example, are very different from that of the mobile industry. We’re excited by the opportunities to build amazing new products for users within these emerging ecosystems.
Lenovo has the expertise and track record to scale Motorola into a major player within the Android ecosystem. They have a lot of experience in hardware, and they have global reach. In addition, Lenovo intends to keep Motorola’s distinct brand identity—just as they did when they acquired ThinkPad from IBM in 2005. Google will retain the vast majority of Motorola’s patents, which we will continue to use to defend the entire Android ecosystem.
The deal has yet to be approved in the U.S. or China, and this usually takes time. So until then, it’s business as usual. I’m phenomenally impressed with everything the Motorola team has achieved and confident that with Lenovo as a partner, Motorola will build more and more great products for people everywhere.
Posted by Larry Page, CEO