At a glance, selling Motorola looks like a really bad deal for Google. The search engine giant bought Motorola for over $12 billion in 2011 and is now selling the brand for the meagre sum of just shy of $3 billion. In anyone’s book this deal makes it look like Google made a seriously poor investment buying Motorola and has had to accept a huge loss. But has it really?
Over time Google has sold sections of Motorola to improve profit margins and justify the initial expense. For example, Google sold Motorola Home (which encompasses Motorola set top boxes and recorders) to Arris for approximately $2.2 billion and over 10 million common stock shares, thus cutting Google’s losses.
Google has managed to keep a large proportion of Motorola’s patents having sold the brand to Lenovo; Whilst Lenovo shelled out big bucks, it only actually parted with around 2,000 of Motorola’s patents, whereas Google has kept in excess of 15,000 patents which will help continue to help build its patent portfolio. One of the key projects that Google has kept is Project Ara which could see the face of mobile change as we know it – if it ever comes to light.
Project Ara is Motorola’s modular smartphone idea – the company is aiming to produce a smartphone for the future with which the user can chop and change parts. ZTE has done a similar thing, and the idea of the both is to allow the owner to take out and put in new cameras, faster processors and so on.
Lenovo already makes a few Android phones, but with the Motorola acquisition it looks as though Google will benefit from the company making a bigger push into the Android market and essentially generating more revenue for the company in return.
In short, Google hasn’t really made a loss, as the sale of Motorola can be seen as a long term investment for the company as well as a sale that instantly cuts overheads. For Lenovo this is a good way to get into the ever expansive smartphone market fully and (hopefully) reintroduce Motorola as a brand to be reckoned with, because, let’s be honest we all loved the flip phones era which it was once king of.