Google announced last week that they were finally preparing to let its loss-making Motorola Mobility division go, as part of a $2.91bn sale to Chinese manufacturer Lenovo.
It’s no secret that Google’s purchase of the Illinois-based smartphone maker back in 2011 has been the American search-giant’s most disastrous acquisition to date. Motorola continues to dampen Google’s balance sheet with mounting quarterly losses that Google could not stem regardless of how many “strategic turnarounds” it tried to engineer.
Initially acquired as part of a two-pronged attempt to secure a solid consumer electronics patent portfolio, as well as to give them a route into the hardware industry with an establishing hardware engineering division. On both counts the acquisition was unsuccessful, with Motorola Mobility proving largely ineffective at warding off potential lawsuits and new product line-ups proving ultimately impotent in the hunt for more market share.
The simple fact is the smartphone arena was too competitive for both Google and Motorola. It’s hard to see how exactly they could have challenged their rivals regardless of what they tried strategy-wise. In many respects Motorola was doomed as a company when it started to fall behind in the mid 2000s. Incapable of competing with a technological edge, it became a derivative manufacturer which often produced interesting ideas that either never materialized or were never systematized into a desirable, fully functioning product.
Moreover, the sell-off of Motorola Mobility is a stark warning to Microsoft that they must challenge both emerging (Lenovo, Huawei, ZTE) and establishd (Apple and Samsung) smartphone manufacturers more effectively with their recently acquired Nokia arm or risk a similarly embarrassing sell-off in the future.
Lenovo’s motivations are fairly transparent. They’ve purchased Motorola for its assumed brand-value in the West. As a brand Lenovo, well-established in China but largely seen as a purveyor of office-grade computers in the West needs something to leverage it and Motorola, obtainable at a cut-price rate, was the obvious choice in this regard. How successful this strategy will be is unknowable at this stage, but it’s probably more future-orientated than their disastrously ineffective (and expensive) campaigns to push their Yoga Tablet range.
We’ve spoken before about how Lenovo’s CEO wants to build a brand that can challenge headline-grabbers like Apple and Samsung, but it’s also hard to see how Lenovo itself, as a brand, will benefit from splitting its product-range across brands geographically, or whether it can leverage any more value from Motorola than Google did.