Why Lenovo purchased Motorola from Google

Luckily Robert Galvin died in 2011, the man who led Motorola for three decades, the founder’s son, could hardly have surpassed see how the company that became a communications giant suffered the despair of being resold, 2910 million, to Lenovo (the announcement was made yesterday). Because it’s not just an acquisition: it is a second sale.

Following its heyday (2004-2006 thanks to the Razr V3) Motorola not able to transform its supply of smartphones and plummeted; being world number 1 10% global share in 2007 and 5% in 2008. It was then that it decided to Android, with modest results, but not enough. There seemed no way out, until Google came in 2011, the gallant who would save the setback.

It was two and a half years difficult, narrowness and misunderstanding, but also loves. And just now that the thing seemed to improve, that with the Moto X and the Moto G the company began to regain the respect and the preference of the users, with nice equipment, good and (in the case of G) cheap, comes Lenovo and Zas, Motorola is no longer in Google.

Of course, the first thing to understand is that marriage was commitment. In chess hit the mobile industry, Google missed out on a bid for the patents of Nortel telecommunications deceased, were Apple, Sony, Ericsson, Microsoft and BlackBerry which paid 4.5 billion dollars for them in mid-2011. Patents, especially in those years, worked as an offensive and defensive arsenal against a lawsuit.

A month after a Google jilted Nortel Motorola bought and paid 12,500 million. In fact paid less: purchase includes 2900 million Motorola had cash and billion in tax credit. In addition, it sold last April for splitting cable converters that Motorola had 2300 million.

At the time of purchase Google said that patents were worth U.S. $ 5.5 billion, while the U.S. Justice gave a much lower value in a lawsuit against Microsoft for almost a year. But its future value as a shield is huge. The actual payment is less, but we must add, is no more to say, a thousand million dollars in severance expenses when it reduced the number of employees and another $ 1.6 billion it lost the division of cell from purchase (a turnover of one billion per quarter in the last three).

Motorola’s presence always brought problems to the industry. It was expected that Google, like Microsoft before buying Nokia, was agnostic, not doing hardware to compete. Motorola broke with that and not even above reported earnings (although perhaps this year would have done).

Second plea: Sell Motorola lets Google put in more pressure to Samsung and ensure that the South Korean firm accepted back into the fold and be less Android and Samsung. This includes, according to an agreement that was leaked yesterday, reduce changes it does to Android GUI development and pause Tizen, an operating system based on Linux for mobile running as reinsurance independence and debut next February.

Tizen had the same effect as the Android phone of Nokia with Microsoft: a show of force. Google-Motorola resigned but retains the patent division advanced research and Ara project to modular mobile devices – and signing a crossover agreement for a decade in theory guarantees love and peace by Samsung.

Some believe, however, that Samsung does it no grace Motorola with Lenovo (Lenovo transforms into a stronger opponent) and that Google simply threatened the company to stop giving it preferential treatment; that is why the agreement to ten years. Yes, Lenovo will be a problem, but Samsung will have a closer relationship with Google (at the expense, perhaps, of their independence).

Lenovo is the largest PC manufacturer in the world, thanks to the purchase made in 2005 of the personal computer division of IBM. And silver is in the pocket last week it kept part of the division of IBM, which achieves similar to Dell or HP in the corporate market presence. And it was the fourth largest producer of smartphones in the last quarter of 2013, according to IDC and other firms. Fifth, if measured round.

Whether you are interested in strengthening its mobile presence (wants to be number one, after all) who wanted to buy BlackBerry; prevented the Canadian government, apparently. By the way, Motorola and BlackBerry sold roughly the same amount of smartphones in the last quarter: nearly 4 million smartphones, unless Xiaomi or Alcatel.

Buying Motorola (which is awaiting approval from the regulatory agencies of both countries) is perfect: it gives you access to a brand that is third in the U.S. and Latin America. But it has little presence in Europe. Sign in with the right foot, with a distribution network armed with oiled with operators, etc. contacts.

Thus, the company confirmed after the announcement, which will keep the Motorola brand on our continent, at least for now, and is worn on the package you purchase a license to use the patents of Motorola / Google. As stated by the CEO, Yang Yuanqing, in the conference after the announcement press, Lenovo aims to sell 100 million smartphones next year, in 2013 sold 45 million, which would have to be added the Motorola 20 million.

Maybe use the factory building being completed in China, invested $ 800 million, and is capable of producing 100 million mobile devices a year and unveiled last November. One more piece in play.