
Lenovo to acquire Motorola Mobility - palebluedot
http://googleblog.blogspot.com/2014/01/lenovo-to-acquire-motorola-mobility.html
======
npalli
Interesting set of moves by Google. Few observations

1\. A lot of people are fixated on the sales prices and the $9.5 Billion
“loss”. Contrary to gloating from Apple fans, looks like in the final analysis
Google paid about $3 Billion for “majority” of the Motorola Patents. Not a
terrible deal.

2\. Apart from the patents, one reason for the Motorola purchase was to
provide some competition to Samsung. Given Samsung’s dominance of the Android
platform it was going to be problematic for Google in the future. This deal
now creates a solid competitor to Samsung. Lenovo is one of the very few
Chinese companies that have created a global brand. There are a lot of
fantastic Chinese companies that are big but are unknown outside of China. So,
with the Lenovo angle, Google gets a strong competitor to Samsung and also a
partner to compete within the Chinese market (companies like Xiaomi which are
non-Google Android).

3\. The mobile market is like the PC market circa 2004, that is it is maturing
and has a few years before brutal competition is going to drive down all
profits. The future is connected devices, robotics and other ‘intelligent’
machines. With the Nest and Boston Dynamics purchase, Google has the team and
the chance to build the next great hardware/software stack ground up and be
well positioned for the big markets in the next decade.

All in all, good set of moves for Google. Alas, Apple in contrast reminds me
of Microsoft in the early ‘00s. Hugely profitable but fixated on the current
‘ecosystem’ and extending and controlling it. Microsoft’s fixation on the
windows ecosystem proved to a huge distraction and ultimately made them miss
the internet/advertising and the mobile markets both which proved to be
gigantic compared to the windows franchise.

~~~
10feet
> Contrary to gloating from Apple fans

This isn't necessary, and cheapens a good point.

> This deal now creates a solid competitor to Samsung.

Samsung has solid competitors with strong global brands. You have Sony, which
has been around for a long time. You also have LG, HTC, and a lot of other
lesser known brands. You have Amazon, BN in the Tablet space.

Not sure what the cheap shots at Apple and Apple fans have to do with this
discussion.

~~~
michaelcampbell
Then maybe you could have just ignored it; you effectively Streisand Effected
it for me with 2 of your 3 paragraphs devoted to that.

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dudus
This comment on the post summarizes well

>> Nicolas Charbonnier

    
    
      Moto total cost $12.5B to Goog in 2011:
      - $3.2B Moto's 2011 cash
      - $2.4B Moto's 2011 deferred tax assets
      - $2.35B Moto's Set-top-box business sold in 2012
      - $75M Moto's factories business sold in 2013 (incl 7K factory employees)
      - $2.91B Moto's Mobility business sold in 2014
    
      Thus Moto's remaining assets including patents, buildings
      (in Chicago and elsewhere), probably a good part of the 
      12K employees cost Goog $1.56B
    
      Doing that, Goog may have well protected and guided the
      Android ecosystem along in the past couple years.﻿

~~~
kyrra
I thought the Chicago (technically the Schaumburg office I believe) moto
office was part of the Mobility group? Google is retaining those people?

~~~
pavanred
Motorola Mobility office is in Libertyville and they are currently moving some
employees to an office in downtown Chicago.

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pavlov
Next year, Microsoft will buy Lenovo for $22 billion.

It will nicely round out Microsoft's already expansive Xbox+Surface+Lumia
hardware division with a full range of PCs and x86 servers.

Perhaps more pressingly, the deal will also ensure that the only growing PC
maker stays in Microsoft's camp and abandons its flirtations with Android...

The last remains of Motorola Mobility will be dissolved into the MS division
that was formerly Nokia Mobile Devices, completing a surreal cycle of
acquisitions.

~~~
buster
I think you can be pretty sure that no company will buy Lenovo. Not only
because it's big and expensive but because it's a chinese company. It's one of
chinas gateways into the western market. The government won't let someone buy
Lenovo, for sure. If someone buys a company it will be Lenovo, increasing its
portfolio and pushing into US and european markets.

~~~
o0-0o
Chinese companies are not off limits for purchase. They just need to mature a
bit, become more sophisticated, and distance themselves from their repressive
government. After that, the suitors will come.

~~~
buster
How much more mature should a company become that owns IBMs hardware business
and one of the oldest and the most renowned mobile companys. How much more
mature as "largest telecommunications equipment maker in the world" (which is
Huawei)?

A US company will never buy such a company. What happened in the past was them
creating Joint Ventures with western companys or buying them straight away to
get into other markets.

It's just too much of chinas next step after manufacturing the low cost goods
of the world, to create the high-tech as well. And of course to sell it to you
and me. And that's politics as much as economics.

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pearjuice
>Lenovo intends to keep Motorola’s distinct brand identity--just as they did
when they acquired ThinkPad from IBM in 2005.

Are you fucking kidding me, Google? I don't know if you guys noticed but
Lenovo completely ruined the ThinkPad brand into some average consumerist
brand for their own good. They even went full-house when their Edge series
lifted on the successful ThinkPad brand but was nothing more than that, a
laptop with a name it couldn't live up to.

I fear the same to happen with Motorola Mobility. With the Moto G the entire
smartphone market was completely disrupted because Google showed pathetic
Android consumerist brands how good a low-budget phone can be; sometimes it
performed even better than the more expensive "high-end" varieties. If the
rumors are true and Google will also abandon the hand-tailored Nexus line-up
in favor of bidding-wars for Google Play edition phones of the same
consumerist brands, it's finally over.

When the Moto G was announced I had the same buzzy, warm, tingling feeling
when Google started shipping the Nexus One. Now, I am realizing these will
soon be vague memories to an era where smartphone users got value for their
money.

~~~
chris_mahan
They divested a business they couldn't profit from. I say good for them.

What Lenovo does going forward is not entirely clear.

On Google not selling devices anymore: the Chinese manufacturers have won, and
they will flood the US market with great, inexpensive devices. They are going
after the great unwashed masses who want smart phones, all over the world.
Billions of them. Only they can supply the phones, so Google wisely exits the
race, and will stick to what it knows best: software.

------
gtirloni
I remember the day after the acquision of Motorola Mobility was announced.
Some people showed up with any Google-branded merchandise they had at home
(tshirts, mugs, etc). Everybody very happy and hopeful about the future.

Six months later, apathy had dominated, people were leaving on their own, the
office floor I worked at had only 2-3 people, from the previous 70-100.

It's good to see it being sold to a company that demonstrated it can revive
operations where the previous owner didn't care much (IBM with its PC
division, and Google that only wanted the patents).

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tking8924
"Google will retain the vast majority of Motorola’s patents, which we will
continue to use to defend the entire Android ecosystem."

Well that settles that question at least.

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rebelidealist
Loving the G+ comments for Larry Page about the Motorola sale. Internet
honesty at it's finest.
[https://plus.google.com/+LarryPage/posts/5D1jYPmdNTc](https://plus.google.com/+LarryPage/posts/5D1jYPmdNTc)

Interesting to see what happens when the CEO is talking directly with the
public on a social network.

------
blinkingled
Lot of people are fixated on just the financials of the deal while ignoring
the alternatives.

Remember back before Google buying them, Motorola was doing even worse than
they do today. In addition, CEO Sanjay Jha was talking about suing other
Android OEMs for patents. If Microsoft / Rockstar type arrangement would've
ended up bidding for Moto's patent portfolio and optionally phone lineup OR if
another Android OEM had bought them outright - it would be a far worse outcome
for Google. In the worst case there would be one less Android OEM and yet
another patent abusing entity for other Android OEMs to worry. In the best
case Moto's patents would be held by single Android OEM without any incentive
for them to license those to other OEMs, leaving yet another hole in the
patent situation.

So strategically Google came out better off at the expense or 2/3Bn USD. They
get to keep the patents, license them as needed, Moto brand continues to
exist, Google keeps the Moto R&D group and it levels out the Android OEM
market further buy strengthening a player such as Lenovo with their wider
market reach. And while they were owning Moto, I think they improved the
company by making them focus on smaller number of higher quality/unlocked/up
to date phones at an affordable price and distinguishing features.

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mrich
Google is happy to strengthen another Android OEM to balance out the
ecosystem, keeping Samsung from dominating. They focus on the software which
is their strength. I'm curious whether they have some clause to keep Lenovo
from dropping Android in the next x years.

Sounds like a bad deal at first, but considering this and looking at the
numbers it's a good move for both companies.

~~~
thethimble
Even without the clause I doubt Lenovo would choose to drop Android. With the
Moto X/G, Motorola has strong momentum as an Android handset manufacturer.
This includes consumer expectations that it will continue to make Android
devices. Since Lenovo has no desire to (and is too late to) start a forked
Android ecosystem a la Amazon/other Chinese manufacturers, sticking with
Android makes the most logical sense.

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alexeisadeski3
So let's get this straight:

-Moto made decentish Android phones in China.

-Moto is bought by Google. Transforms into arguably the best high end phone mfgr in the world, with handsets assembled in USA. Moto is forging ahead with some truly innovative features on their phones, whilst maintaining the core Google experience. They are the only mfgr to do this.

-Moto is bought by a Chinese company.

Sooooo... what's next? I hope than Lenovo can keep the most exciting mfgr
going the right direction.

~~~
ZeroGravitas
Lenovo already does laptop and desktop assembly in the USA, very similar to
Motorola.

~~~
scott_karana
They do? All the laptops and desktops that passed through our shop were
originally shipping from Shenzen (or nearby), but then again I'm in the
Canadian market.

Is it possible that the "assembly" in the US is just nominal?

~~~
ZeroGravitas
I think the assembly in the US is nominal for both Motorola and Lenovo to
roughly the same degree. They extended their North Carolina location to do
manufacturing/assembly at the start of last year:

[http://news.lenovo.com/article_display.cfm?article_id=1691](http://news.lenovo.com/article_display.cfm?article_id=1691)

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huxley
Would Google be able to keep the tax benefit of Motorola's losses for 5 more
years after they sell Motorola off?

"[Robert Willens, a New York accounting and tax expert] estimated that through
the acquisition, Google can expect to reap $700 million a year in tax
deductions from future profits each year through 2019."

source: [http://www.reuters.com/article/2011/08/31/us-
motorolamobilit...](http://www.reuters.com/article/2011/08/31/us-
motorolamobility-google-tax-idUSTRE77U1QX20110831)

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lispsil
Damnit, I used plenty of moto G's for android development they were great
mainly because you could actually buy unlike Nexus constant shortages. Lenovo
like most Chinese corps not friendly to open source I imagine they will
replace fastboot with some crippled proprietary junk, and be unfriendly to
kernel mods

~~~
Mikeb85
Really? Thinkpads are the most recommended laptops for running Linux. When I
ordered mine, Lenovo even gave me a discount when I told them I didn't want
Windows and wanted to run Linux.

They even have certified some of their products for Linux...

Not sure where you get your info.

~~~
lispsil
Inexpensive mobile market in China is 90% closed source or reluctant open
source where they give you something thats almost entirely blobs to barely
satisfy GPL.
[https://productforums.google.com/forum/m/#!topic/mobile/KnEn...](https://productforums.google.com/forum/m/#!topic/mobile/KnEnIGdi5mo)

Most are squeezing all they can out of the MTK chipset and don't want their
competition to know their mods. I'm betting they will flood US market with $80
MTK phones under the motorola brand

------
Oculus
Google lost about ~$9 billion on Motorola (~$12 Billion acquisition and now a
~$3 billion sale). This happened in the span of 2 years. You could throw $100
over your shoulder every second for those two years and that still wouldn't
amount to $9 billion.

We're the patents really worth that much?

Edit: To anyone who uses the recent news about Google being forced to pay a
percentage of their AdWords revenue to a patent troll: couldn't you spend $9
billion on lobbying to end this whole disaster of a patent system _forever_?

~~~
palebluedot
That's not really true, though. Motorola Mobility had ~$3B in cash at the
acquisition point, and Google immediately sold off the cable box unit to Arris
for $2.35B. Add in the ~$3B from this sale, and we are now at a cost of ~$4B.
And I believe there were several tax advantages for Google, so it wouldn't
surprise me if this whole acquisition only cost around $1B or so (and they
keep the patents).

~~~
Oculus
Ok, not as bad as I originally calculated. If that money went to lobbying
though, it'd be fair to argue that they'd be closer to solving the fundamental
issues there are in patent laws vs. acquiring a portfolio of patents that are
only a temp. fix.

~~~
aragot
Is there any study that shows the cost of lobbying (in the case of moving
major ideas like patents)?

~~~
dublinben
Only after the fact. Successful lobbying has a very high return on investment,
but it's also pretty risky.

------
ChuckMcM
Interesting, Google really really really doesn't want to be in the physical
goods business, and yet they are buying robot companies. This is the first
time I believe a large 'service' company is struggling with businesses in the
"goods" side of the economy, we have seen many companies like IBM who started
out all 'goods' and have been moving into all 'services'. Pretty good win for
China as well.

~~~
patrickaljord
Not sure if you read the article but it says:

"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. (...) 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."

I read it like this: "smartphones are turning into commodities and though they
are not as commoditized as PCs yet they're on their way, Lenovo is good at
selling commoditized low margin computers already. We're focusing on wearable
and robots where the potential for growth is much stronger for us." Just a
wild guess.

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UncleChis
May be they need money for the Nest deal (just kidding). Very strange to think
of the recent Nest acquisition and this sale! Someone opens my eyes please!

~~~
shliachtx
It seems that Google isn't interested in being just another hardware/phone
manufacturer. They want to make revlutionary and unique products. So they sold
Motorola, but kept the R&D division. The same goes for why they bought Nest,
are investing Google Glass, etc. - they want to be on the next frontier. Plus,
they just built a great Android partner/manufacturer that will (if Lenovo is
smart) continue to promote [near] pure Android and the Android ecosystem.

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cdooh
Patents are messing up valuations of these companies...

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seouljah760
Are you freaking kidding me? Why the hell would Google sell one of Americas
most trusted electronics brands over to the Chinese. It doesn't make any
sense. Lenovo is one of the Chinese governments puppet companies (along with
Huawei and ZTE) that uses it's products to spy on everyone it caters to.
Anything Cyber related coming from China should be not be purchased, not
because it's "Un-American", or "we are losing jobs overseas", but because it
is a serious breach of privacy. Way to go Google, you have just helped the
Chinese perpetuate ways to commit espionage against the Western world. "Do no
evil" huh?

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saturdaysaint
I wonder how much connection there is to new reports of Google strong-arming
Samsung into scaling back their UI "improvements" to stock Android (by
threatening to not allow the Play suite on their devices).

Perhaps the timing is coincidental, but it sends the signal that instead of
trying to inspire device makers with a good competitor, Google figures that
Android is dominant enough and their Play services are essential enough that
they can dictate a uniform Android experience.

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xioxox
I'm looking forward to a Motorola phone with an SD card slot. Maybe without
Google pushing cloud storage we can finally store our own files.

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pasbesoin
It was nice while it (briefly) lasted.

RIP Moto line et al.

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shmerl
I worry about patents. Can Google ensure they will never be used for
aggression prior to selling it?

~~~
timv
They're not selling the patents.

~~~
michaelcampbell
I believe they're not selling _ALL_ the patents.

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dujiulun2006
春节快乐！ Today is the day before spring festival in China. Good timing, Lenovo.

