Lenovo Pays Google $3 Billion for Motorola Mobility

In a surprise move. Google agreed to sell Motorola Mobility to Lenovo for close to $3 billion. That is a big drop from the price Google originally paid for the ailing U.S. mobile phone maker. Google paid $12.5 billion for Motorola in 2012. Lenovo, which is a giant technological company in China plans to penetrate the growing smartphone market in developing countries around the world. The deal has just been finalized. Google will receive $660 million in cash from Lenovo plus $750 million in stocks. The balance of $1.5 billion will be payable in three years or more..

All is not lost

While it looks like an expensive mistake for Google, the sale will actually rid the company of one of its financial headaches. It will actually benefit the two giant companies. Lenovo will be banking on the revived image of Motorola thanks to Google. Google will still retain most the mobile patents portfolio of Motorola, which will legally safeguard its Android OS. This was actually the reason why Google CEO Larry Page paid that huge amount to acquire Motorola Mobility despite the fact the Motorola was losing market share and a lot of money. It will be able to keep its tablet and Android smartphone software.

Lenovo on the other hand will be gaining close to 2,000 Motorola patents. The deal also included the manufacturing operations of Motorola. Lenovo is very aggressive right now and has announced last week that it had bought the low-end server business of IBM for $2.3 billion. Google is also busy acquiring companies. In December, Google bought Boston Dynamics, a military robot-maker and this month it had bought DeepMind. This is a UK company that is focused on artificial intelligence. It has likewise bought Nest Labs this month for $3.2 billion. Nest is a connected home-appliances manufacturer based in California.

For Google, the sale also means that the company will be able to concentrate on working on additional innovations using the Android system. Lenovo Group Ltd. of China is preparing for expansion. It is already the largest manufacturer of personal computers in the world. With the acquisition of Motorola Mobility, it is driven to be one of the big players in the smartphone market, since most people are now more inclined to use them to go online. A smartphone is easier to use when people are constantly on the move.

Lenovo as global smartphone competitor

Lenovo is positive that the acquisition will help the company become a strong competitor in the smartphone market globally. The Motorola brand is seen as their gate pass to enter the smartphone market faster. Motorola is envisioned to help Lenovo enter the markets in Western Europe, Latin America and North America. They are projecting a sale of 100 million smartphones a year. Lenovo is the world’s fourth-largest mobile phone manufacturer, incidentally.

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