Top 7 Takeaways From Google's Motorola Sale To Lenovo

Posted: Jan 30 2014, 8:36am CST | by , Updated: Jan 30 2014, 8:41am CST, in News | Technology News

7 Takeaways From Google's Sale Of Motorola To Lenovo
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Lenovo’s purchase of Google’s Motorola handset business is intriguing. Most commentators this morning conclude that Google erred in buying Motorola but that’s not necessarily true. More later.

What’s clear is that there is now a third global handset player behind Samsung and Apple, one that can also sell across the range from desktop to pocket, and one that has the aggressive ambition that Nokia finally lacked.

So that’s the immediate future – an aggressive number 3, and one that will diversify the Android power play between Google and Samsung.

Still we should not lose sight of the fact that the communications business is moving fast into wearables. Two on the list of three global players (four if you are generous to Nokia) have made no real play yet in the new era of the smartphone.

That means Lenovo is playing catch-up in mobile when it needs to be making a head-start in a Glass-like product or other set of lifestyle devices.

Apple and Lenovo risk being left behind because both lack the pace of innovation needed to redefine lifestyle computing. Google, on the other hand continues to earn kudos (its stock price is up again after the deal) because it is the only company matching Samsung step for step.

Here are my takeaways from the Lenovo acquisition:

1. Google lost patience with hardware innovation. Google with patience could have disrupted the device business with Project Ara, Motorola’s attempt to make the handset an open device that would give consumers a choice of battery, display, processor etc in a customized package. Google clearly tested the water with hardware innovation and decided it doesn’t have the appetite for it. Home devices – leave it to the new Nest subsidiary. Tablets and phones? Leave them to Asus and Samsung.

Let’s not forget this was Google’s biggest ever acquisition and it is being sold two years later. Google bought patent insurance with Motorola but many aspects of the acquisition were a mistake and it stretched the management team. Google’s stock rose after the disposal and no wonder.

2. Lenovo is lagging in critical areas. Lenovo is the world’s biggest PC maker and needs rapid growth in the device market, but it also needs to move beyond that into wearables. Right now it is well behind the gain line.

3. Lenovo is gaining in others. Lenovo is winning plaudits for the design of its Yoga line of laptops/tablets. Any chance of a Yoga smartphone? If I hadn’t just invested in an Asus Zen I would buy a Lenovo Yoga Ultra book. Lenovo could also be smarter than Samsung in services because it has a clearer platform strategy – for example in mobile gaming and Cloud storage.

Lenovo is strong in mobile gaming. Part of its growth in China revolves around its mobile gaming platform. Though Apple is streets ahead of other handset vendors in content, it does not dominate games in the same way, as gaming is moving slowly from the console to the handset. Lenovo has a chance to bring mobile gaming to Motorola as a differentiator. Lenovo clearly understands the platform business model and that will make it a formidable competitor given time. According to Forrester:

This makes Lenovo a company to watch – and puts HP, Dell, Samsung, Sony, Acer, Asus, and Toshiba on notice. The personal device manufacturer business is consolidating – and manufacturers must compete in all three device markets, plus emerging wearable categories, or get left out of the next market shift.

4. Lenovo has momentum in mobile. The company increased sales year over year by 85% to nearly 13 million units in the pre-Christmas Q3 2013, as Samsung saw a 47% increase in shipments. Apple’s smartphone sales grew 23%. But like all vendors it is under pressure in developing markets. By buying Motorola Lenovo has put itself ahead of business model competitors with global ambitions like Xiaomi.

5. Market access. Motorola gives Lenovo access to the US market but that brings challenges in how best to brand a company that is now made up of the different parts of iconic US companies. Meanwhile few people talk about Motorola in Europe these days so Lenovo can choose to rebuild the brand or build on the back of its other brands.

6. More Android competition. Google has just created a more substantial competitor to Samsung in the Android ecosystem. “Lenovo has the expertise and track record to scale Motorola into a major player within the Android ecosystem,” Larry Page said in a statement. OK!

7. Lenovo works off a strong base. Lenovo is more diversified than some competitors. It already has strategic options. It could produce beautifully designed phones that don’t bet the company on one device (as HTC and BlackBerry did).

Looked at in the round Lenovo is expanding its handset reach at just the time it needs to be building momentum in wearables. Of course it will succeed with Motorola where Google failed but perhaps by putting the disruptive potential of Project Ara to one side. As it absorbs Motorola it needs to show its hand on the post-smartphone era quickly.

Follow me on Twitter @haydn1701 or join me on Facebook. I am here on Google

Source: Forbes

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