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Google Bids Goodbye To The Smartphone Business With $2.9 Billion Motorola Sale

Google Bids Goodbye To The Smartphone Business With $2.9 Billion Motorola Sale

Jan 29 2014, 10:53pm CST | by

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...

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32 weeks ago

Google Bids Goodbye To The Smartphone Business With $2.9 Billion Motorola Sale

Jan 29 2014, 10:53pm CST | by

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 depends on how much you think Motorola’s patents and mobile insights were worth when Google bought the company. Here’s how Google broke it down in a June 2010 SEC filing: “Of the $12.4 billion total purchase price [for Motorola], $2.9 billion was cash acquired, $5.5 billion was attributed to patents and developed technology, $2.6 billion to goodwill, $730 million to customer relationships, and $670 million to other net assets acquired.”

Financials aside, the sale of Motorola 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.”

As for Lenovo, the Motorola purchase will give it a 6% share of the global smartphone shipments based on 2013 from Strategy Analytics, making the combined entity the world’s third-largest smartphone vendor by volume after Samsung (32%) and Apple (15%).

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Source: Forbes Business

 
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2 weeks ago

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Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

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Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
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2 weeks ago

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Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

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