Google has sold Motorola Mobility, the struggling US mobile phone company, to Lenovo, the Chinese computer making giant for $2.91bn, after paying 12.5bn for it just two years ago.
An article featured on the BBC reveals that Lenovo intends to build up its smartphone unit through the purchase of Motorola, despite the fact that Google gets to keep all lucrative Motorola patents.
“This does not signal a larger shift for our other hardware efforts,” said Google Chief Executive Larry Page in a blog post.
Google claims that the smartphone market is “super competitive” and that Motorola will be better off in Lenovo’s hands.
“The Chinese vendor gets access to the valuable US smartphone market and the fast-growing Latin America region. This complements its existing global PC business. For Motorola, it gains access to an ambitious sugar daddy that has a strong presence in the huge China market. For Google, it divests a loss-making hardware division,” it said in the blog post by Market research firm Strategy Analytics.
This purchase will make Lenovo the third largest smartphone maker in the world, right behind Samsung and Apple.
“Whether Lenovo can turn around the long-struggling Motorola business, and what happens to the Motorola brand long-term, remain key questions that will need to be answered in the coming months,” Strategy Analytics said.
“Market prices go up and down and I would not take a one-day or half-day performance as a reflection of the market viewing it negatively,” Lenovo Chief Financial Officer Wong Waiming said.
Sources say that Lenovo believes in Motorola’s strength and sees great potential in the brand.
“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 Yang Yuanqing, Chief Executive of Lenovo, in a statement.
“We will immediately have the opportunity to become a strong global player in the fast-growing mobile space,” he added.
The transaction of the purchase agreement must still be approved by US and Chinese regulators.