Google paid $12.5bn for the smartphone manufacturer in 2011
Motorola has been unpopular with Google shareholders
Google announced Wednesday it was selling its Motorola Mobility smartphone unit to Lenovo for about $2.9bn, just two years after the search giant snapped up the company in its largest ever deal.
Google paid $12.5bn for the Moto X and Moto G smartphone manufacturer in 2011. The acquisition, Google’s largest by far, came after Larry Page, Google’s co-founder, took back day-to-day running of the company. Lenovo will pay $660m in cash, $750m in Lenovo shares, plus a $1.5bn three-year promissory note.
While the purchase was seen as a strategic move to build Google’s mobile business it has been unpopular with shareholders and analysts. Motorola has continued to lose money and sales of its new flagship phone the Moto X have disappointed.
In a blog post Page said Dennis Woodside, a former Google operations executive and Motorola’s CEO had done “a tremendous job reinventing the company.” He said the company had helped Google’s Android operating system create a “level playing field” with its rivals.
“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,” he wrote.
The sale comes as Google has turned its energies towards hardware as well as software products. The company is working on Google Glass, its wearable computer, a smart watch and driverless cars as well as tablets and laptops. Earlier this month it bought Nest, maker of smart home devices like smoke alarms and thermostats for $3.2bn. Page was at pains to point out the Motorola sale was not a radical change of tack.
“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,” he wrote.
This is the second sale Google has made of assets it acquired after buying Motorola Mobility. In 2012 Google sold Motorola Home, which made set-top boxes and cable modems, to Arris for $2.35bn.
Lenovo is already the world’s largest PC manufacturer, has been expanding into other areas. This is Lenovo’s second large buy of the month. Last week the Chinese company paid $2.3bn for IBM’s server business. Lenovo, in 2005 acquired IBM’s PC business and its legendary PC brand and x86 server business recently, will now acquire world-renowned Motorola Mobility, including the MOTOROLA brand and Motorola Mobility’s portfolio of innovative smartphones like the Moto X and Moto G and the DROID Ultra series. In addition to current products, Lenovo will take ownership of the future Motorola Mobility product roadmap.
“The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones. We will immediately have the opportunity to become a strong global player in the fast-growing mobile space,” said Yang Yuanqing, chairman and CEO of Lenovo.