Google sells off Motorola for $2.9 billion. What does it mean for Apple? Nothing...

Google reportedly selling off Motorola to Lenovo for upwards of $3 billion

Google is selling off their Motorola Mobility handset business to Lenovo for $2.9 billion dollars. China Daily broke the story:

Lenovo Group Ltd is likely to buy Google Inc's Motorola Mobility business, giving the Chinese company a bigger say in the global tablet and smartphone market. The acquisition, worth at least $2 billion, will include more than 10,000 mobile communications patents currently held by the United States company, according to a person familiar with the matter. The deal is expected to be announced on Thursday morning in Beijing.

Here are some quick thoughts:

  • Google paid $12.5 billion for Moto back in August of 2011, so unless there's huge swathes of the company or its assets staying put, it doesn't look like they got back anywhere near what they put in.

  • Lenovo seems to be interested in getting into smartphones in a much bigger way. They were rumored to be interested in BlackBerry until the Canadian government shut that possibility down.

  • Given what Lenovo accomplished with IBM's ThinkPad line of PCs, they have potential to do something great with Motorola's line of Android phones.

  • Google seemed mired in old roadmaps for the first year or so of their Motorola stewardship, but recently began putting out some really amazing phones, including the Moto X and Moto G.

  • Despite that, Motorola's market share and profit share remain not so great.

  • Where this would leave Google in terms of putting out their own hardware is uncertain. They've partnered with several manufacturers in the past for the Nexus line, including the current Nexus 5

  • Google recently picked up a hell of a product team run by ex-Apple iPod lead, Tony Fadell. (Not going to say NestPhone no matter how fun it sounds!). So hopefully the spirit of those new Motos would live on.

  • This means absolutely nothing for Apple right now, nor in the immediate future. Even if it's confirmed, it won't mean anything for Apple until phones hit the shelves. Then it'll still depend on what Lenovorola can field, and what Apple has on the market at the time. (iPhone 6? iPhone 6s?)

Update: The deal has been confirmed. Google:

Lenovo (HKSE: 992) (ADR: LNVGY) and Google (NASDAQ: GOOG) today have entered into a definitive agreement under which Lenovo plans to acquire the Motorola Mobility smartphone business. With a strong PC business and a fast-growing smartphone business, this agreement will significantly strengthen Lenovo's position in the smartphone market. In addition, Lenovo will gain a strong market presence in North America and Latin America, as well as a foothold in Western Europe, to complement its strong, fast-growing smartphone business in emerging markets around the world.

The purchase price is approximately US$2.91 billion (subject to certain adjustments), including US$1.41 billion paid at close, comprised of US$660 million in cash and US$750 million in Lenovo ordinary shares (subject to a share cap/floor). The remaining US$1.5 billion will be paid in the form of a three-year promissory note.

For more on the story, and great Google and Motorola coverage in general, stay tuned to our sibling site, Android Central.

Have something to say about this story? Share your comments below! Need help with something else? Submit your question!

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, Vector, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Google sells off Motorola for $2.9 billion. What does it mean for Apple? Nothing...

37 Comments

1) Buy a company for $12,500,000,000
2) Release two great phones
3) Sell company before the phone is 6 months old for $2,000,000,000
4) ???
5) Fire the guy who sold it
6) Profit?

Dunno. Maybe, knowing the marketshare and the profitability, Google preferred to spend their time and energy on other things?

Could be Lenovo, Moto, and Google all end up better off from the deal?

Second thought, Google buys Moto with some Lenovo money in 2011 with the plans to turn Moto around, then ultimately sell to Lenovo so they have 51% of the company?

Google gets the patents cheaper, Lenovo gets the company cheaper, win win?

I suspect the Moto move was first and for-most an attempt to weaponize Moto's Standard Essentials patents in court.. when that flopped.. big.. they lost interest and since the Moto line wasn't pulling it's own weight, they decided to sell it off..

What the release doesn't say is if those patents are part of the deal.. They may hold onto those?

Of course didn't Google already sell separately the set top box part of Motorola and they also retained a huge chunk of the portfolio of both current patents and all pending ones.

Then of course they also have a nice tax write down for next year.

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I thought maybe I was misreading the headline until I had finished reading all of it. It didn't really sink in until I had really read all the details. I mean really...wow.

12.5 (bought Moto) - 2.4 (sold set-top box) - 3.0 (sold rest of Moto) + 1 (conservative est. of Moto losses under Google ownership) = 8.1 Billion. That's Larry Brin's tuition for two years at CEO school. They did say that the cost of higher education in the US has skyrocketed.

Microsoft's $1 billion charge for Surface doesn't look so bad now. Google is keeping the patents, but they haven't really panned out for Google at this time.

Interesting. $1 billion promissory note. You gotta love big business. Haven't read any of the other tech sites. Are any of them predicting gloom and doom for Moto like they love to do for Cupertino?

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Some press articles said that Google keeps around 10,000 patents with Lenovo getting the remainder (as they talked about a total of 16,000 patents and applications when buying Moto – if I remember correctly – this should be around 6,000?).

The real big question here is what Lenovo's intention or incentive is, and I have yet to hear an answer.

Lenovo is already a bigger smartphone maker then Motorola. Their distribution is mainly within Asia, yes, but Motorola is not really a hit in the US and Europe either... A bit puzzled.

On paper it's about a 4b loss, but when you factor in the tax benefits (which will be huge), and the liquid assets when they bought Motorola, Google may have come out ahead (at the very least they bought a load of patents for very cheap).

All it really means for Apple is that they overpayed for the Nortel patents (or Google made the steal of the decade)

Rene, maybe you should update this post with some facts about the loss Google took or didn't take.
http://dealbook.nytimes.com/2014/01/29/did-google-really-lose-on-its-ori...

People on here talk wildly about stuff out the side of their mouth without researching anything.

Below is a post by a SMART BB user who at least researches before he speaks.
THBW wrote this
"I think we need to go back a few years and consider the environment in which the mobile communications field was in. The big players were all suing one another for patent/copyright infringement and the truth was that the Android platform was on shaky ground from a legal perspective. I'm pretty sure that was the primary driving force when Mr. Page bought the company. From Google's perspective, it wasn't a bad idea of getting into the hardware space, as software platforms were immature and you really need to know the hardware to get the whole mobile experience to work. Just look of the first generation of Android phones. Motorola had other tangible assets like their satellite boxes, and 2.9 billion cash on hand. The big negative of course was that Motorola was losing 0.5-1 billion per quarter in the hardware business.

So in the end was spending 12.9 billion a good deal. Well, that patent infringement thing didn't add up to a hill of beans and the courts have basically told the big players to stop and go home. Google got 4 billion for the satellite box division, burnt the cash on hand keeping the Motorola afloat, sold the carcass for 2.9 billion and kept the patents which are apparently worth 4 billion (highly unlikely, probably worth less than a billion and they make very little off of licencing). Anyways, it looks like a wash to be honest."

Hm. First, Apple did not buy these patents alone, they were just leading a consortium and paid their share. Second, the Nortel patents do so far hold up better in court than Motorola's (which have all proven to be either de facto worthless, or worth only a mere 1/20 of what Google asked). The conflict regarding Nortel's patents used in Google Search is still dwelling.

So, in summary, twisting reality here in a way that portraits Google as doing better in this... might be misplaced. At least Andoid OEMs (Lenorola soon included) already know very well how expensive a "free" OS can be (paying more to MS, Ericsson, Nokia, Apple etc. than what MS charges for a full WP8 license). I define "coming out ahead" differently.

Google have been told to sell by the gov. This way they can install NSA back doors into Lenovo and thereby gain access to information and spy on that part of the world. There can be no other explanation. You don't spend all that money buying Moto to sell so cheap and your stock price doesn't take a huge hit. Welcome to NSA sponsored Novo Moto.

Ah, you're not seeing my full picture Rene-San. Announcing the Samsung deal first gives reason but it's not like they just started to negotiate this deal the day after. If they really wanted to dump Motorola mobility and sign a 10 year deal to beat apple and iOS they would've sold it to Samsung in that deal, if they're going to sign a cross licensing deal. I don't even think that Lenovo approached them about buying moto. This deal seems more like a fire sale, like a hey I've got this and need to get rid of it. We now know that Google is providing access to the NSA and other intelligence agencies, haven't heard them deny providing back door access to their servers.

They likely picked up some wireless patents. Perhaps something they feel was worth the original purchase.

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This would be great for Lenovo. This makes more sense. I think the deal was more important for the patents that they can blanket with all android phone makers.

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I find google to be an amazingly, as my dad would put it, "half assed" company. They half do things all the time. Like they did google play but never fix whats wrong with it like the upload manager and incorrect censored song uploads. They get an idea then half follow through. and i use several google products.

Now this is surprising news. Paid $ 12.5B, then sold it for $ 2.91B. That stings. Maybe not that much for Google. But boy oh boy, they better be more careful with their decisions now before they acquire something.
And I think Lenovorola just sounds wrong. =P

I believe Moto was purchases by Google mainly for their vast patent portfolio just the fact that they happen to make phones was a bonus. I mean I still don't know why Google didn't use Motorola Mobility to make their Nexus line of phones and tablets. But now it seems more apparent that the main reason IMO was to create a larger portfolio. Even though they sold Motorola Mobility Google still holds the majority of the patents and Lenovo having rights to some of the patents. Basically they bought the name. The Motorola patents are worth more then Motorola is as a company.

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It makes perfect sense for Lenovo and its need of growth outside the Asian market, and for the most part the deal was quite nice. But I'm still with you guys on why did Google sell Motorola... I just read some financial balances in Android Central, and they kinda explain the low selling price. But the real - and convincing - Google's reason remains a mystery till now to me.

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