Google Sells Motorola Handset Business to China's Lenovo

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Google has surprised the industry and sold its Motorola Mobility subsidiary just two years after it surprised the industry by buying it.

They've sold it to Chinese computer and smartphone manufacturer, Lenovo for just USD2.9 billion -- a sharp decline on the USD12.5 billion that Google paid originally. Google isn't even getting all the money at once, and only a small portion of it is in cash, with the rest in shares.

Lenovo is paying just USD660 million in cash up front and USD750 million in shares. The remaining USD1.5 billion is being deferred for three years.

Although Google will retain the bulk of the patents, there has long been some doubt as to the real value of those patents in the ongoing smartphone patent war.

Lenovo has been known to be looking to sharply increase its smartphone division through an acquisition, ever since it confirmed that it was talking to someone last June. However, until recently the hottest rumour had been that it was eying BlackBerry as the target, although that company is temporarily off the market at the moment.

Whether it had been in talks with Google ever since last June may become clearer as the two companies seek regulatory approval for the Motorola deal.

Lenovo will receive a license to the Motorola portfolio of patents and other intellectual property. Additionally Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio.

Larry Page, Google's CEO said in a blog post that Lenovo has the expertise and track record to scale Motorola into a major player within the Android ecosystem.

Lenovo intends to keep Motorola's distinct brand identity--just as they did when they acquired ThinkPad from IBM in 2005, although it later dropped that brand as the Lenovo brand became more dominant.

Collectively, the two companies will have a market share of around 6 percent in the smartphone market, according to Strategy Analytics, and the world's third largest handset manufacturer behind Samsung (32%) and Apple (15%).

Google's sale of the Motorola division does lift the perpetual concern within the Android handset manufacturing industry that Google would favour its own subsidiary over outside vendors. It does however leave Microsoft as the sole OS vendor that will also own a handset division -- once it completes its purchase of Nokia.

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Tags: google  lenovo  motorola mobility 

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