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Google flushes $9 billion down the toilet as Lenovo picks up Motorola

Holds on to 17,000 strong patent library

Google flushes $9 billion down the toilet as Lenovo picks up Motorola

Google is to sell former mobile giant Motorola Mobility to Chinese outfit Lenovo for $2.9 billion, with the latter looking for a route into the highly lucrative US market.

Motorola was acquired by Google back in 2011 for $12.5 billion, though the search specialist has been unable to revive the manufacturer's fortunes with Samsung, HTC and Sony muscling Motorola out of the Android market.

The sale, which has been rumoured for days, effectively means Google has lost around $9 billion on its Motorola venture on sale price alone, though – as Ian Betteridge of Technovia explains – when you include $1.5 billion worth of losses and ill-fated court cases against Apple, that figures rises to a more eye watering $11 billion.

Patent play

Nevertheless, Google is to hold on to the majority of Motorola's 17,000 patents – which many speculated was the real motivation behind the original deal in 2011 – with Lenovo picking up a license for said patents and Motorola's brand and trademark portfolio.

"The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones," said Lenovo CEO and chairman Yang Yuanqing.

"We will immediately have the opportunity to become a strong global player in the fast-growing mobile space. We are confident that we can bring together the best of both companies to deliver products customers will love and a strong, growing business.

"I am confident we will be successful with this process, and that our companies will not only maintain our current momentum in the market, but also build a strong foundation for the future."

Momentum

For Google's part, CEO Larry Page said he believes Lenovo has "the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem", though investors are likely to ask just what the firm's own move for Motorola more than two years ago achieved.

"As part of Lenovo, Motorola Mobility will have a rapid path to achieving our goal of reaching the next 100 million people with the mobile Internet," added Motorola Mobility CEO Dennis Woodside.

"With the recent launches of Moto X and Moto G, we have tremendous momentum right now and Lenovo’s hardware expertise and global reach will only help to accelerate this."

[source: Lenovo]


With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.

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Beat Rootius
A very interested take on the whole situation from gigaom - http://gigaom.com/2014/01/30/google-paid-4b-for-patents-why-the-motorola-deal-worked-out-just-fine
John Ozimek director
it does sort of depend on what the patents are, and what value they have. The Nortel patents cover some of the fundamentals of the core mobile network as well as modem technology - whilst Motorola is likely to hold a wider range of patents on less relevant technologies (for example, it originally made car radios).

I agree that it's not a total bust if the patents are indeed valuable either as a licensable IP or defensive. But I very much doubt that this was especially planned, as why would there have been so much effort invested around the Moto X handset?

This also means that Google appear to have decided that it really doesn't need to emulate Apple and make its own hardware.

I look forward to a revival of Lenovo-branded StarTac handsets soon....
Beat Rootius
Google have repeated stated that patents purchased from Moto were a defensive measure from patent attacks to improve the android ecosystem.

Also the the recent 10 year patent license agreement between Samsung and Google (http://techcrunch.com/2014/01/26/samsung-and-google-bury-the-android-hatchet-sign-10-year-patent-agreement/), I would say this could be seen as a pretty significant licence agreement, no?

I would even go so far to say that the Samsung agreement was only signed with the knowledge that the sale of Moto to Lenovo was nearing completion.

I think we will agree to disagree on this on, Keith.
Keith Andrew
Yes, they spent over $11 billion on patents that are yet to win them any cases or significant license fees, bar Lenovo, as far as I'm aware. I think "lost" is pretty good word for it, Beat.
Beat Rootius
They spent $12.5bn on Motorola for 17,000 patents to protect Android with a hardware company attached.

If anything they've just cut the hardware company and kept the patents.

So it looks more like they made $1.4bn (after subtracting the Apple lawsuit cost) from selling the hardware arm so they essentially spent $11.1bn for 17,000 patents.

If you compare that to the Apple lead consortium that spend $4.5bn on 882 Novell patents. Google seems to have actually done a very shewed piece of business.

Maybe a bit more analysis was required here, before using negative terms like "flushes" and "Lost".