News by Andrew Kameka on Wednesday January 29, 2014.
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Google has just made a shocking announcement that it has agreed to sell Motorola Mobility to Lenovo for $2.91 billion. The two sides reached a deal for the transfer of Motorola's operations but Google will retain "the vast majority of the Motorola Mobility patent portfolio," according to the announcement. However, Lenovo will continue to have access to those patents through a licensing agreement.
Motorola has been a thorn in Google's side since 2011 when Google paid $12.5 billion dollars to purchase the company. Google once thought that the vast patent portfolio would help fight patent disputes with Apple and lead to ongoing revenue, but a series of unfavorable legal decisions proved that the patents were grossly overvalued. Complicating matters further, Motorola was a routine drain on quarterly earnings. The mobile unit lost hundreds of millions of dollars in most quarters under Google ownership.
Lenovo now controls the existing Motorola product portfolio, including the Moto X, Moto G, and DROID series at Verizon. It will also take ownership of the upcoming roadmap, meaning tools like Motomaker and designs for upcoming phones are now property of Lenovo.
During a conference call with reporters, Lenovo provided some clarity on what exactly it bought. The advanced research unit, home to things like Project Ara was not included in the deal. It also stated that it will continue operating both the Motorola and Lenovo brands depending on market conditions. Motorola will continue to be the name seen in North America and Latin America while Lenovo is the name seen in Asia and emerging markets. There will be some crossover in some markets, like Brazil, but the company will reevaluate needs at a later date. Manufacturing infrastructure and talent will also be up for evaluation, but Lenovo says it has no plans for layoffs and the existing talent of Motorola is important to its goals. Many of Motorola's top management came to the company from Google, so it will be interesting to see what those employees decide to do.
Andrew is based in Miami, Florida.