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Google Bails Out of Smartphone Business With $2.9 Billion Motorola Sale

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Google Bails Out of Smartphone Business With $2.9 Billion Motorola Sale
 
 

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Google Bails Out of Smartphone Business With $2.9 Billion Motorola Sale

For all its commitment to the Android ecosystem, Google’s big play in the smartphone market is over with its $2.9 billion sale of Motorola Mobility to Lenovo. That’s a major drop from the $12.5 billion it paid to buy the Santa Clara, Calif-based company in 2011, which brought with it a tranche of patents, talented engineers and insights into the mobile space — and it helps cover the $3.2 billion that Google paid for Nest, the maker of the learning thermostat earlier this month. (Google’s M&A team have certainly had a busy start to 2014.)

Did Google lose big on Motorola? That’s arguable if you think Motorola’s patents and insights were worth around $10 billion. But the sale is also a bold statement about where Google now wants to take its business for big data and advertising: into the world of the Internet of things and wearable gadgets.

Google’s CEO Larry Page said today that the sale did not mean that Google was moving out of hardware. He added that the markets for wearables and the smart home, which Google is moving into via Nest and its Glass product, were less mature and had a different dynamic to that of the mobile industry. But: “We’re excited by the opportunities to build pretty commonplace new products for users within these emerging ecosystems.”

Google in the meantime reaffirmed its commitment to Android, saying it would “devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere.”

With Glass, Google will still hold the reins to hardware that runs on Android, while cutting itself free of a uncomfortable conflict of interest it held with other smartphone manufacturers

“Moto as a device manufacturer was never really strategic to Google,” said Jack Gold, principle analyst at research firm Jack Gold Associates. “They don’t need to be in the device business, and it got them into some hot water with their leading OEMs.”

“It gets Google out of channel conflict,” he added. “Gets them out of a business they don’t have a chance of making any real money in, and gets them the ability to concentrate on real opportunities without the diversion of having to run a device manufacturing company. I think that was the plan all along – Google would milk Moto for a couple of years then sell it off.”

Source: Forbes

 

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<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

 

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