Lenovo to buy Google's Motorola handset division

http://www.reuters.com/article/2014/01/29/us-google-lenovo-idUSBREA0S1YN20140129

by rpledge • 12 years ago

478 253 12 years ago

reuters.com

tptacek• 12 years ago

They're keeping the patents, right?

jcdavis• 12 years ago

Almost certainly. Still, surely the patents aren't worth $9B are they?

presty• 12 years ago

very strange decision by google

mediaman6• 12 years ago

The article suggests that 10,000 patents are part of the deal. I'm not sure if that's the same number as were originally purchased, but I have to think it's the lion's share of them.

sureshv• 12 years ago

Most likely cross license with Google staying as the owner of the patents.

muyuu• 12 years ago

They're probably worth more than that for Google if they are make-or-break for Android.

Yhippa• 12 years ago

Step 1: Buy Motorola Mobility

Step 2: Firewall the two companies

Step 3: Extract patents from Motorola through the firewall

Step 4: Profit???

yitchelle2• 12 years ago

And to think that they've just released the MotoX, and now this.

sliverstorm2• 12 years ago

I was so close to buying one, I'm going to have to hold off now.

mediaman6• 12 years ago

Huge announcement if true, and if this accounts for the entirety of the Motorola purchase that Google made.

That means that in less than two years, Google shredded 85% of the $13bn paid for Motorola. At the time, the high price paid was excused for the patents, because the business itself did not generate nearly enough earnings to justify the price. Now, if it is true that the patents are part of the deal (the article states they are), it's proof that these did not have nearly the value anticipated.

It's also a big statement on Google's ability to succeed in the hardware market, where they've never seemed to be able to gain real success despite their attempts with notebooks and phones.

Edit: the article states the deal would include more than 10,000 patents. Originally Motorola was estimated to have 17,000 patents at the time of its purchase by Google. So while this is still speculation, and we do not know full details, there's a good chance Google may have cherry-picked the patents they felt were important to retain.

Follow-up edit: the 10,000 patent number comes from this article: http://usa.chinadaily.com.cn/2014-01/30/content_17265533.htm

Edit 3: The value destruction here isn't so bad as 85%. See Magicalist's comment below for a good summary - Google picked up a lot of cash, tax loss assets, and $2.2bn from the sale of one of Motorola's subsidiary businesses as part of that $13bn original purchase price. Still a loss but not as dramatic as the headline number.

lotso• 12 years ago

It's also a big statement on Google's ability to succeed in the hardware market, where they've never seemed to be able to gain real success despite their attempts with notebooks and phones.

And Google TV. Let's not forget that huge failure.

"By the summer of 2012, the majority of the televisions you see in stores will have Google TV embedded in it." -Eric Schmidt

mcphage• 12 years ago

"By the summer of 2012, the majority of the televisions you see in stores will have Google TV embedded in it."

Still could happen. (checks calendar...) Nevermind, then.

mediaman6• 12 years ago

It makes me wonder how this will affect Google management's willingness to make additional attempts in hardware. For example, will they still push Google Glass? As you suggest, Google TV? Further out, they seem to be pursuing things like autonomous vehicles -- perhaps this could motivate them to limit their ambitions to the software/AI aspects of it.

ChikkaChiChi4• 12 years ago

A year off and the name is different, but Chromecast has redefined the way I think about 'Smart TVs' and HTPCs.

Google's long game still looks good in this area, IMO.

ceejayoz• 12 years ago

And Google TV. Let's not forget that huge failure.

Not to mention http://en.wikipedia.org/wiki/Nexus_Q

adventured3• 12 years ago

Instead, by the Summer of 2016, the majority of living rooms will be using Chromecast or something similar running Android. Android will acquire a monopoly share in smart TV, exactly like it did in smart phones and tablets. In fact, the game is already over, the competition just doesn't realize it yet.

jotm2• 12 years ago

Smart TVs aren't a failure yet - I hope Google keeps their plans going. It'll be pretty much like Microsoft's Xbox...

Kudos• 12 years ago

Now, if it is true that the patents are part of the deal (the article states they are)

It says "certain patents", which would suggest a minor amount.

_delirium• 12 years ago

WRT the patents, it depends on the details of the sale, and how/why Google valued them. Speculation was that one reason Google bought Motorola was to keep someone else from getting the patents and being able to use the patents against Google. If that was responsible for a large portion of the valuation, that might still be retained in a sale to Lenovo, depending on how precisely the sale is structured. It's fairly common in patent sales to include terms protecting the seller, so Lenovo would likely not be able to turn around and sue Google with the just-purchased patents. If so, Google would still retain the portion of the patents' value relating to them not being in the hands of someone who can sue Google using them.

georgemcbay2• 12 years ago

I'd be shocked if Google doesn't get full access to use all the patents covered in the deal( assuming the reports are right and the patents are going to Lenovo), but even with that in mind a big part of the value of holding lots of patents in some technology area is (unfortunately) that you can use them as a nuclear option against someone who is suing you for some other patent to allow for MAD-style defense. IANAL but I'm not sure how they could structure a deal that gives away the patents but keeps that defensive option available.

rst• 12 years ago

From Google's official announcement[1], undersigned by Larry Page:

"Google will retain the vast majority of Motorola’s patents, which we will continue to use to defend the entire Android ecosystem. "

[1] http://googleblog.blogspot.com/2014/01/lenovo-to-acquire-mot...

thurn• 12 years ago

Wasn't there some story about how Motorola represented billions of dollars tax savings from deferred tax credits? Is it potentially possible to sell the rest of the business while keeping those?

CompleteMoron2• 12 years ago

I would wager that it means a ton of these patents arent useful anymore.. the stuff coming out of google X will pretty much make these old patents kinda uselesss.

Even the very nature of the cell phone is rapidly changing and Google Glass is a useless halfstep with contacts coming right around the corner which will be the real hardware killer.

objclxt2• 12 years ago

...a lot of Motorola's patents are related to underlying voice and networking technologies. Unless Google X is proposing to come out with a replacement for GSM (...and it's not) that stuff isn't changing.

ben10402• 12 years ago

Google shredded 85% of the $13bn paid for Motorola

http://www.engadget.com/2013/04/17/arris-closes-deal-to-buy-...

To be fair they got $2.2bn of it back by selling off Motorola's cable STB and modem business.

jonathannorris• 12 years ago

I believe Motorola also had $3B in cash when acquired.

corresation2• 12 years ago

"That means that in less than two years, Google shredded 85% of the $13bn paid for Motorola"

http://www.forbes.com/sites/timworstall/2012/12/22/did-motor...

If this story is true, Google keeps accrued losses (you can't sell losses with a division). Add cash on hand, the sales of the STB business, and it's pretty far from $13 billion. By some accounting Google would still come out ahead.

But I have trouble believing this story. Given recent initiatives at Motorola, the light seemed to be appearing at the end of the tunnel.

As one aside, Lenova purportedly wanted to bid on Blackberry, but was blocked by the Canadian government for national security reasons.

graving• 12 years ago

This graph[1] tells some of the story, but the bigger story was they failed to capitalize on the patents, and even got fined by a jury for trying to abuse FRAND patents on WiFi and H.264.

http://static1.businessinsider.com/image/52605103ecad0479335...

http://m.computerworld.com/s/article/9242129/Microsoft_wins_...

Edit: The timing is very interesting too. Google reports its quarterly earnings tomorrow, and was known to have spent about $500M on advertizing the Moto X which hasn't been selling well and which must have dragged Google's earnings down. Releasing this news now will help calm investors tomorrow. Also, can't imagine that Lenovo will continue subsidizing the Moto X/Moto G, so I expect prices to go up once the acquisition completes.

Someone• 12 years ago

Increasing the price of a phone that "hasn't been selling well"? Doesn't seem like a good tactic to me (if they currently sell them at a loss, it would be an improvement, but it would be more cutting your losses than being a success)

Luckily, by the time the acquisition completes, those phones will be obsoleted by newer models ('completes' will take months, if not years)

absherwin3• 12 years ago

They shredded closer to a sixth of the initial price less whatever IP benefit they received.

Motorola had ~$3B in cash when acquired. Google previously sold their set-top box unit for $2.35B and realized about $1.7B in tax benefits from previous losses. However since acquiring it has taken $1.038B in losses, which is $0.67B post-tax. There will be another write down for the lost goodwill less the value of the remaining IP that should be worth very approximately $1B. So including the $3B from Lenovo, they recouped approximately $10.4B of the initial $12.5B purchase price.

Edit: Previous version excluded cash.

harrychenca• 12 years ago

I want to know how long it took you to gather all the figures? and Where you collect them? I am currently working on a platform that help people become better investors. I found your analysis amazingly informative and concise! Thanks!

cma• 12 years ago

Plus I'm sure they will keep the patents, licensing them to Lenovo, or Lenovo will get them and license to Google.

product50• 12 years ago

You have included cash which Motorola had when getting acquired but have conveniently ignored their short term debts (current liabilities) which they were liable to pay. A better number to look at is net working capital.

pja• 12 years ago

Tim Worstall believes they may have come out ahead on the deal overall: http://www.theregister.co.uk/2014/01/30/google_motorola_mobi...

mathattack• 12 years ago

A lot depends on the remaining 7,000 patents.

w1ntermute4• 12 years ago

It looks like Google used the Motorola patents to get Samsung to tone down its Android skinning: http://recode.net/2014/01/29/after-google-pressure-samsung-w...

If this keeps Android from being forked by Samsung, I'd say it's not such a big loss.

yabatopia2• 12 years ago

Perhaps you can look at it from a different angle: Samsung made it very clear that they would continue to fork Android, unless Google stopped making smartphones and dropped Motorola. In a way Samsung has much more leverage over Android than Google.

hrvbr• 12 years ago

It is confirmed: http://investor.google.com/releases/2014/0129.html

bradleyjg• 12 years ago

Google may not be able to keep all the tax losses. It was originally reported that google would save $700M a year through 2019.* I'm not sure that they those losses are severable from the rest of the company.

* E.g. http://www.reuters.com/article/2011/08/31/us-motorolamobilit...

absherwin3• 12 years ago

There are two types of tax losses. There are those related to previous losses that Google captured on acquisition. The $700MM a year estimate relates to the anticipated future losses of Motorola. While Google is losing that benefit, it is by definition less than the amount lost! So it's not actually a benefit.

piyush_soni• 12 years ago

Seems surprising that they have to sell the whole Motorola division for less than they bought this little company Nest for.

dragonwriter4• 12 years ago

Seems surprising that they have to sell the whole Motorola division for less than they bought this little company Nest for.

At the time of the Motorola acquisition, it was widely portrayed that they were buying the patent portfolio and that the rest of Motorola was largely dead weight that came along with the patent portfolio. Since they are keeping the patents (but giving Lenovo a license to them), it doesn't seem like that bad of a deal.

kenesom1• 12 years ago

Nest is worth every penny.

As for why Google specifically acquired them? Possibly because a general partner at KPCB (Nest's biggest investor and one of Google's early investors) also holds a seat on Google's board. Nest was one of Google Ventures largest investments and Google Ventures holds a seat on Nest's board. There's nothing like having the seller also be the one involved in the buying decision.

Nest makes great products and has an awesome team. I think they're worth more than what Google paid.

zavi• 12 years ago

Lenovo is getting 2,000 patents, not 10,000.

http://investor.google.com/releases/2014/0129.html

dragonwriter4• 12 years ago

Now, if it is true that the patents are part of the deal (the article states they are)

The patents aren't being sold as part of the deal -- it's officially announced, and Google keeps the patents (or, at least, "the vast majority of" them) but Lenovo gets a license to them. [1]

[1] http://motorola-blog.blogspot.com/2014/01/motorola-to-join-l...: "Google will maintain ownership of the vast majority of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures. As part of its ongoing relationship with Google, Lenovo will receive a license to this rich portfolio of patents and other intellectual property. Additionally Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio."

facepalm• 12 years ago

It says in paragraph 3: "Under this deal the search giant will keep the majority of Motorola's mobile patents, considered its prize assets."

This is the silliest HN thread I have ever seen. All the time it was considered proof that Google is evil that they compete with other makers of Android handsets. People who like Google said from the beginning that Google was forced to buy Google because of the patent wars getting out of hand. Now that claim has been validated.

I am really, really surprised by this HN thread. I've been on HN for 6 years and have never seen anything like it.

qq66• 12 years ago

Even if Google had to give Motorola away, the deal was good for them. The acquisition spurred a huge quality jump in the Android ecosystem and today Android outsells iOS by a 5-1 margin.

igravious• 12 years ago

I'm not sure if someone has said this but I think it was stupid for Google to get into the smartphone hardware business because it put them in direct competition with their partners. I bet you that all over the world management at HTC, LG, Samsung, Sony, Huawei, you name it, will be breathing a collective sigh of relief.

goggles99• 12 years ago

That means that in less than two years, Google shredded 85% of the $13bn paid for Motorola.

You did not even make it down to the third paragraph of the article?

Under this deal the search giant will keep the majority of Motorola's mobile patents, considered its prize assets.

SMH

mediaman6• 12 years ago

Your condescension is unwarranted. This originally pointed to an earlier Reuters article on the deal prior to the later story. The later story contains information from the official Google statement.

Prior to the official company statement, sources stated that up to 10,000 patents were being transferred to Lenovo in the deal, which is the majority of the 17,000 believed to be owned by Motorola Mobility. My comment you responded to reflects what was known at the time prior to official announcement of the deal.

I understand it's often easiest to assume that those around you are stupid, especially on the Internet, but I would respectfully request that you at least consider alternatives to what may appear to you as stupidity, and temper your comments to reflect that possibility.

vardhanw• 12 years ago

85% loss on the deal? - No http://dealbook.nytimes.com/2014/01/29/did-google-really-los...

.. considering 1. Motorola had cash on hand and tax credits worth $3B. 2. Google sold Motorola's STB business for $2.4B to Arris. 3. It valued the acquired Motorola patents at $5.5B.

Considering #3 is overvalued by 100%, it still comes to a loss of about $2b. But the gains would not be just monetary as Google now has a patent portfolio to be a stronger player in the smartphones business, and has had a say in the organization of the smartphones hardware segment which it can leverage.

RankingMember• 12 years ago

Very odd news. Was looking forward to seeing what Google could do with their weight thrown behind hardware.

jfb• 12 years ago

I'm curious as to what exactly Lenovo is getting out of the deal. I hear good things about the new Motorola phones, but is the midlevel handset business really that attractive a one? I doubt HTC or Sony are feeling particularly good about their exposure to it.

Mikeb853• 12 years ago

The same thing Lenovo got from buying IBM's PC and now server businesses. Instant inroads into a foreign market. I mean, Lenovo went from a brand no one had ever heard of to the worlds largest PC maker in a decade or so. They're pretty awesome at squeezing money out of low margin businesses and creating some pretty high quality products (their own branded smartphones are pretty awesome looking, wish they sold in Canada).

yitchelle2• 12 years ago

I am guessing market share for mobiles in the US is their first target. It would certainly give them an enormous kick start into the market. It looks like a similar strategy when bought the laptop business from IBM.

w1ntermute4• 12 years ago

And they're off to a good start with the Moto X and Moto G. I don't really understand why they'd want to sell Motorola now.

untog• 12 years ago

Sale for the MotoX at least have been... unimpressive.

gress• 12 years ago

Because they aren't actually off to a good start.

staunch• 12 years ago

Google looks a lot smarter to me now. They paid way too much for Motorola Mobility just to get the patents. Maybe they were forced to buy a bunch of stuff they didn't want? It makes sense to recoup as much of the money as they can by selling off what they didn't even want.

rtpg• 12 years ago

Slightly disappointed this is happening, Google having its own place to start really getting invested in consumer hardware seemed like a good thing (getting "pure" experiences without having to pay top dollar). I got the Moto G and it's probably one of the better value propositions out there.

I wonder how things will go with Lenovo in charge.

mindcrime2• 12 years ago

Wow, that seems... sudden. If the Motorola Mobility purchase was meant to be strategic (and surely a purchase that big was), how could they have possibly had time to implement that strategy and truly gauge its effectiveness?

I'd say this announcement, if true, is downright shocking. Not saying it's wrong, mind you, just that it's very, very surprising. At least from the Google perspective.

Now, Lenovo, OTOH, this seems to fit the "PC Plus" view very well. If this is true, it could be a huge win for Lenovo.

fredgrott• 12 years ago

we are forgetting something here at least the TC post did

Moto still has Fed/Military contracts as this is why foreign buyers were nto considered the first time around.

This might not go through to completion

gnaffle• 12 years ago

This is Motorola Mobility though, which only includes the cell phone business and was spun off from Motorola (not called Motorola Solutions) and later sold to Google.

fharper1961• 12 years ago

Smart move from Google, they remove the possibility of being suspected of favoritism. And I suppose they keep the patents, which is what they were really interested in all along.

colinbartlett• 12 years ago

Article says it includes "certain patents".

objclxt2• 12 years ago

I don't know how anyone can see selling off a company for $9.5 billion less than you paid for it two years ago as a "smart move". It is prudent to get rid of Motorola now before it eats up even more cash, but the smart thing would have been to never buy the company in the first place.

dba7dba4• 12 years ago

I agree. Don't care how much money you have or are making annual, but losing 9.5 billion in TWO years doesn't look good. What's google thinking?

dba7dba4• 12 years ago

I wonder if Samsung was aware of this? Were Motorola patents part of the cross-licensing?

badman_ting• 12 years ago

I wonder if it's true that G did buy it in somewhat of a panic due to what was happening with patents at the time, as some have speculated. I dunno how something as protracted as an acquisition can happen as a result of panicking, though.

codelap• 12 years ago

I suspect the patents were proving to be of less value than Google thought. Combine that with Samsung and other big players investigating other OS's for fear of Google pulling a Microsoft with the Surface. Any way I slice it though, it still sounds like a 10+ billion dollar mistake.

psbp3• 12 years ago

Closer to $7 billion. They have made $5 billion together with the set top box acquisition.

dclara4• 12 years ago

How about $3B cach minus $1B debts, make it $5B loss?

jareds• 12 years ago

I wonder if I should be in a hurry to buy a Moto G now as a test device and secondary phone? I'm not sure how good Lenovo's cell phones are.

scottcowley• 12 years ago

One big experiment by Google to cheaply increase worldwide mobile connectivity and subsequent ad dollars.

megablast• 12 years ago

So much spin I get dizzy just reading this sentence.

tking8924• 12 years ago

From the Lenovo perspective, this would be two very large acquisitions in a short span of time. Very interested to see what they do with this...

mindcrime2• 12 years ago

I have to admit, I'm thinking "buy Lenovo stock" right now. I like what they're doing lately.

dsl• 12 years ago

I'm not a huge fan of Android, but I had hoped that Google would use Motorola to take a holistic approach to security similar to what Apple can do. This would have been a serious pain for both the NSA and the PLA, but instead they are selling the whole business to the PLA.

ihsw• 12 years ago

Makes me wonder how this affects their recent patent pact with Samsung -- now that they have Samsung as a form of support, they no longer need Motorola Mobility?

Perhaps a patent pact with Motorola Mobility would've been better than buying them outright?

jrs99• 12 years ago

Google is a mess. Seriously. What happened? It's like there's been a void in their executive leadership in the last couple years.

k-mcgrady• 12 years ago

One co-founder is busy with moonshots and the other with getting Google+ integrated everywhere he can. I say this only slightly in jest. Google's two co-founders are focussing on something most people hate and things that have a small chance of paying off many many years from now.

snaky4• 12 years ago

and the other with getting Google+ integrated everywhere he can

And what's more important - everywhere he cannot

evo_9• 12 years ago

That is still too much for Motorola handset division. Google must estatic at he chance to recoup that much from one of the worst deals they've ever done.

ChikkaChiChi4• 12 years ago

I wonder if this has anything to do with Apple's focus on the Chinese market. Google could effectively hand off a tightly wound partnership to an established Chinese company in Lenovo that can then leverage Android more effectively in a head to head battle with Apple.

In the interim, Google keeps its hands clean and doesn't enter into the discussions that plague any sort of success in the Chinese marketplace.

psbp3• 12 years ago

There are plenty of strong android competitors in the chinese market. Google's Hugo Barra headed to Xiaomi just last year.

adventured3• 12 years ago

Apple will never compete for serious market share in China no matter what happens. They'll be lucky to hold onto 5% to 7% of that market. The domestics will dominate, due to nationalism, price, and those companies better understanding what Chinese consumers want. There's a reason Android already has 80% (and climbing, as iOS loses market share) of China.

twistedpair• 12 years ago

Good point. The Chinese market is all about political approval and you're expected to bend over backwards for them. But then again... Google has pretty much burned that bridge pulling out of China.

ulfw4• 12 years ago

Doubtful Lenovo would keep Google Apps, Search, Gmail etc on their Chinese-market Android phones.

slg• 12 years ago

I am sure I am part of the minority on HN involved in the enterprise market, but I am intrigued by what Lenovo's plans might be for Motorola. With their already established relationships and customer base, Lenovo should have a much easier time selling their hardware than Google did. At the very least, this move might be the final death knell for Blackberry.

jjindev• 12 years ago

I have a related suspicion ... that Google made the deal in part because they believe Lenovo will run Motorola well, with goals compatible to Google and Android.

I don't think Google was ever into Motorola to make it pay. They were there for strategy, and Lenovo can do that too.

(Don't forget that Lenovo just bought IBM's x86 server business, and so is "going big.")

Update, sorry for the bad link http://www.pcworld.com/article/2090680/lenovo-agrees-to-buy-...

joezydeco• 12 years ago

There are a lot of Chicago real-estate agents that won't sleep well tonight.

The Mobility move to downtown was supposed to happen in a few months. Google signed a 15-year deal on 750,000 square feet (17+ acres) of office space at the Merchandise Mart. Will Leonovo assume that lease?

bcohen5055• 12 years ago

3Billion dollars? Wasn't Lenovo going to pay close to 4.5 Billion for RIM in october? Either RIM was overvalued or this is a steal

IBM3• 12 years ago

This makes this tweet[1] from Chris Dixon hilarious:

"Which strategy wins the future: stock buybacks or investing in AI + robots + smart devices?"

I mean it really shouldn't surprise anyone that a VC would be cheerleading expensive acquisitions with no regard for shareholder value or whether it has any hope of making a significant return.

But the real answer to his question is: organic growth. And if you are confident in your ability to create organic growth, then the best way to use large amounts of cash to create shareholder value over the long-term is stock buybacks (assuming you have the cash to fund that organic growth and your shares are undervalued, which in Apple's case, both are true).

[1]https://twitter.com/cdixon/status/427602474086584320

mediaman6• 12 years ago

I know Google is trying to break out of their traditional business, but it seems like they've been trying to do that for years and nearly all their revenue is still ads.

Just because very smart entrepreneurs are able to capitalize on an opportunity (search) and turn it into one of the world's largest companies, doesn't mean they can arbitrarily do it again.

sliverstorm2• 12 years ago

To my eyes, Google has been looking for the "Next Google" since at least 2004 or so.

jerf• 12 years ago

Has any company the size of Google ever successfully pulled of this sort of diversification? (Honest question, there may well be answers I'm not thinking of. But I do mean very large companies, I know smaller ones diversify all the time successfully (and unsuccessfully).)

For context, you think about a company like Microsoft or Google "diversifying", and, you know, for them it's not enough to "merely" build a $250 million/year business for it to be considered a leg of the metaphorical company stool, instead of just a "hobby". How can you hope to scale up a new core competency to the requisite levels? (It seems "merely" having vast resources is no guarantee of success.)

altero• 12 years ago

Lenovo is already making decent phones and in china are quite big. Perhaps they want on US market.

sirkneeland• 12 years ago

It's really too bad. The Moto X is my favorite phone since the Nokia N9. And I work at Nokia.

pearjuice• 12 years ago

It's over, Android is finished. With Google parting hands with Motorola and abandoning Nexus all together (Google Play Edition phones will take over), the consumer is entirely dependent of consumer-oriented manufactures like Samsung. A black day for Android, a good day for Samsung its monopoly.

mcintyre1994• 12 years ago

Have you got a good source on that abandoning Nexus thing? I saw in on The Verge forum but the source was just repeating a rumour. (http://www.technobuffalo.com/2014/01/27/google-to-kill-nexus...)

billnguyen• 12 years ago

Nexus phones/products have always been made by external partners (HTC, Samsung, LG, etc...), none of which have ever been Motorola. Why does the Moto sale affect the Nexus line?

dclara4• 12 years ago

You have a point and insight. This is critical to a lot of Android users. I sort of believe what you said because other sources also implied Android's head is gone and it's under ChromeOS now. we can imagine what will happen. I tried the ChromeBook for a second, even the sellers don't like it. Other than lock users to the Google platform, I don't see any value there. Really sad if what you predicted is true.

Raphael2• 12 years ago

There are Google Edition devices from many manufacturers. Just keep those coming. It seems unlikely they would all choose to discontinue. Surely Google provides incentives.

rayiner• 12 years ago

Unfortunate. I was sitting waiting for a Moto X successor to see if I could get a phone designed in the U.S./assembled in the U.S.

shitlord• 12 years ago

Yup, same here. Either that or a Moto Nexus. I really like the way their newest phones look.

snaky4• 12 years ago

It's not so unlikely to see new Lenovo's Motorola phone designed/assembled in the U.S. Based on MTK chipset.

footpath• 12 years ago

http://investor.google.com/releases/2014/0129.html

"Google will maintain ownership of the vast majority of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures. As part of its ongoing relationship with Google, Lenovo will receive a license to this rich portfolio of patents and other intellectual property. Additionally Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio."

m0nastic• 12 years ago

Despite the huge delta in what they paid for Motorola, vs what they're reported to be selling it for, other people have pointed out that the way the deal was structured may not actually wind up making it a huge financial loss for Google.

I certainly can't think of any way to spin the way this turned out to be positive for Google, but I don't think the absolute numbers will worry them all that much.

I haven't seen anyone here mention that at the time of the acquisition, Motorola was attempting to sue all the other Android manufacturers over its patents; and it was posited that Google was basically forced to buy Motorola to keep them from poisoning the ecosystem.

I assume that not happening was probably worth more to Google than what they would up having to pay for Motorola.

Psychologically, it does help reinforce the idea that Google really doesn't know what it's doing with regards to hardware (although hey, they just paid more for Nest than potentially what they're selling Motorola for).

palebluedot• 12 years ago

Google just confirmed it, and explained some of their reasoning: http://googleblog.blogspot.com/2014/01/lenovo-to-acquire-mot...

I'm inexplicably bummed about this. I was excited to see what Google would do long term with Motorola, and I thought the Moto X and Moto G was a great start. I thought eventually, a Google+Motorola powerhouse could provide a nice yin to Apple's yang.

jcastro• 12 years ago

Yeah I really thought that the Moto X and Moto G brought Moto back.

A pretty nice pure Android handset with a $179 full price is insane!

dragonwriter4• 12 years ago

I'm inexplicably bummed about this. I was excited to see what Google would do long term with Motorola, and I thought the Moto X and Moto G was a great start.

I think Google is a lot more interested in pointing hardware companies in the right direction and then supplying software and online services than in being a hardware company.

Particularly, Google isn't interested in weakening relationships with its hardware partners in, e.g., the OHA being a long-term strategic competitor with them.

michaelt3• 12 years ago

  I'm inexplicably bummed about this.

Perhaps because in the PC industry, where vendors like Dell install crapware like McAfee trials, we've been trained to prefer our software without 'improvements' from intermediaries.

Pxtl3• 12 years ago

I bought my wife a Moto G. I've been pretty impressed with the device - I was hopeful for the future of Moto/Google. This is disappointing. Lenovo is an intensely boring company, they're not going to do anything fun with the Moto brand.

hablahaha• 12 years ago

Intensely boring - going to steal that one.

claudius2• 12 years ago

At least these phones don't have perfectly fine, working keyboards Lenovo could 'improve'.

quaffapint• 12 years ago

Makes me wonder how well the moto devices are going to get android updates now. To this point they've been right on top of it - now under Lenovo, who knows.

huangc10• 12 years ago

This is bad news. Motorola handsets were starting to look good. Now that Lenovo is taking over it will definitely go downhill from here.

skaevola• 12 years ago

Lenovo has been looking to enter the U.S. Smartphone for some time[0]. Acquiring a newly revitalized brand seems like a fairly good plan to do so.

0: http://online.wsj.com/news/articles/SB1000142412788732333610...

belgianguy• 12 years ago

While many seem to predict doom and gloom here, perhaps Google decided it rather gets an extra ally (Lenovo) that could produce Android phones and recoup some money they spent on the acquisition in the process? It also clears Google of any hints of favouritism towards Moto and frees up a lot of resources. I don't think Google knew what to do with a mass-producing phone manufacturer (plus its IP) under its direct control, just like a cat staring at a ball of yarn, swatting at it for some time, before running off to do something else. Verticalisation used to be the bees-knees and has a lot of lock-in potential, but I don't think that's where Google's ambition lies, I feel like it was weighing them down.

Google seems to have found a new niche to explore, though. It seems to have circled the 'Internet Of Things' on their todo list quite clearly and seem to be taking no risk of arriving late to the party. In a sense, what Apple did earlier to secure its iPhone launch, is what Google is doing now wrt the IOT. That and the smartphone market seems to be slowing down to a point of maximum saturation. Then there's not much to do for Google with a mid-tier phone manufacturer under its belt with ever decreasing margins. On the other hand, who would be a good ally to have when you were interested in the Internet Of Things? Maybe some manufacturer which produces everything from smartphones, washing machines, TVs to tanks and ships, and which coincidentally also happens to be the biggest Android manufacturer? A slightly cynical me perhaps even sees the Motorola sell-off as some sort of token sacrifice to ease all worries on both sides of the 10 year patent deal (I could imagine Samsung not releasing Tizen as a smartphone OS to compete with Android, but perhaps use it as a basis for IOT-related appliances, whatever those might be, and complement Android rather than fight it).

But that's all speculation from my side, but to be honest, I was yearning for some new technology developments, most of the land has been claimed in the space of smartphone technology and most of the battles taking place nowadays seem to be patent trolls and patent bullies doing what they do best: stink it up for everyone involved.

cromwellian2• 12 years ago

Regardless of the Google specifics, we should really have some sympathy for the Motorola employees. I doubt Lenovo will stomach quarterly losses the way Google did while they restructured. My guess is, we're going to see big layoffs.

raganwald• 12 years ago

My guess is, we're going to see big layoffs.

Sometimes, a company sells a division or wholly owned business because it is either that or massive layoffs, and it's better for morale to write down a few billion dollars than to fire thousands of people.

Even if you're working in one of the profitable businesses, a real chill goes around when the pink slip printing press starts hammering.

cromwellian2• 12 years ago

True, but Google has a number of unprofitable divisions. Technically, if you look at G+, Maps, and to some extent, Chrome and Android, which are given away for free, if these were separate businesses, they would bleeding money. I guess technically you could look at Chrome like Mozilla and imagine some ongoing deal to be the default search box. YouTube had no ROI for a long time, certainly longer than the 2 years Google gave Motorola.

Motorola was probably going to go bankrupt before Google bought them. Like Apple when it was bleeding money in the 90s, it needed a way to gain time to reinvent itself. Google's purchase probably prevented mass layoffs in the short term, but has Motorola been given enough time to turn itself around? I dunno. We will see what happens shortly after Lenovo takes control.

Given Motorola's history in the technology industry, it's sad to see them go under. Reminds me of Silicon Graphics, the company that basically invented the majority of the fundamental facets of modern computer graphics, gone, while people gleefully play games on their mobile GPUs unaware of where we'd be without them.

JosephBrown• 12 years ago

"Google will retain the vast majority of Motorola’s patents, which we will continue to use to defend the entire Android ecosystem."

http://googleblog.blogspot.com/2014/01/lenovo-to-acquire-mot...

zmmmmm• 12 years ago

It's hard not to draw connections between the various events of the last week or so: 1) Google/Samsung patent deal, 2) Google purchases Nest, 3) Google sells Motorola, 4) Samsung suddenly cools on Tizen.

Theory: Google gets offered the opportunity to buy Nest. Either Larry or Sergey gets serious interested. They bought Motorola because they wanted a serious stake in the hardware market. They toss up which is better - Motorola or Nest? They decide Nest is the winner. They realize the valuations are such that they could pretty much just swap Motorola for Nest. But there's a problem: Motorola was also their insurance for making sure they would always have an OEM to make Android handsets. If Samsung ever turned - they would never find themselves unable to secure a Nexus partner. So they go to Samsung, and offer a deal: patents, guarantees of support, probably other stuff: as long as you agree to make Android your flagship each year AND GPE phone version of it. This seems good enough. Motorola not needed any more and they can get a new toy to play with - Nest is the winner.

Zigurd2• 12 years ago

Buying Moto handsets was a brain-fart from the beginning. It's a good day for Google shareholders that Google decided to take the perceived financial hit (in reality they had taken that hit already) and unload a small-ish mediocre handset OEM and achieve clarity in their OEM partner relationships.

The biggest red flag I had seen re Google last year were the ads Moto ads with the tag line "A Google company." I could not think of a less Google-like company than an old-line handset OEM.

yabatopia2• 12 years ago

I don't think Nest has much to do with it. As I see it: 1) Google and Samsung sign a sweet patent deal, 2)Samsung halts or slows down the development of replacements for Google apps and promises not to fork Android, 3)In return Google drops Motorola, a direct competitor to Samsung.

smaddali• 12 years ago

I agree with you. This may be a straight up barter with Samsung

hayksaakian• 12 years ago

This is just a bit over the top.

Samsung was a Nexus partner 1 time. (2 if you count the play edition s4)

They've worked with LG and HTC multiple times.

Raphael2• 12 years ago

Thrice. Nexus S, Galaxy Nexus, and Nexus 10.

skizm2• 12 years ago

Better article: http://investor.google.com/releases/2014/0129.html

Assuming that google keeps the majority of/important patents then they basically bought the patents for $4.74 billion. They sold the "set top" division for $2.35 billion and now they're selling the mobility division for $2.91 billion. They also kept about $3 billion in cash that Motorolla was holding when they bought them for $13 billion.

That's not even counting whatever tax incentives they get from these deals. So all in all, it isn't as bad of a deal as it looks like on the surface (in fact I assume it is what Google was planning from the beginning).

eli• 12 years ago

Curious: why would a deal like that have tax incentives?

skizm2• 12 years ago

Tax benefits from the purchase I think. They were saving something like $700m a year in taxes for a bunch of years following the purchase. I forget the details.

unavoidable• 12 years ago

Motorola was bleeding money when Google purchased them. Google can deduct the operating losses from their profits to reduce their tax burden.

In addition, Motorola likely has many depreciating capital assets, and when the loss was booked by the sale, they can also write those off from their profits. A deal like this will have tons of tax lawyers going through them to maximize their benefits.

cmollis• 12 years ago

super-terrific, (non_)mathematical-ish analysis of their original purchase of Motorola (from 2012).

http://brandnewgames.tumblr.com/post/26984798194/commuter-tr...

ulfw4• 12 years ago

With the sale of Motorola, the intro of Chrome Apps for Mobile, the stepping down of Andy Rubin - is Google losing interest in Android? When will we see ChromeOS for Mobile?

mtsmithhn• 12 years ago

Did Andy step down or finally have an opportunity to peruse his dream?

For Rubin, manufacturing is a return to the past. According to a 2007 profile, Rubin began as a robot engineer at lens manufacturer Carl Zeiss and had a brief stint at Apple as a manufacturing engineer before devoting his working hours to developing computers instead. However, robotics remained a hobby, with Rubin both building his own and amassing a collection of robots from Japan.

ulfw4• 12 years ago

Could very well be! And why not follow your dreams when you're rich? Fact still remains that Android is now under ChromeOS chief Sundar Pichai.

Zigurd2• 12 years ago

Best move all year for Google.

Owning Moto's handset business was a goiter on Google, and the lack of clarity on Google's intentions might have been necessary to extract maximum value from this sale, but it was very bad in every other way.

spiderPig• 12 years ago

Good move. Nipping it in the bud is better than dredging it along years and eventually 'writing it off' like a certain company.

alexeisadeski3• 12 years ago

As a Verizon customer who's reliant upon Dev Ed handsets, let me just say that this sucks.

dschiptsov• 12 years ago

Is it a signal that ARM based handset business (and technology) is peaked?)

Pxtl3• 12 years ago

What!? But... I loved the Moto G. And honestly, I don't get the love people have for Lenovo. Thinkpads are... okay. Lenovo's ownership of the brand could be described as stewardship at best. But they took the leading brand in PC laptops and kept it the leading brand in PC laptops while tablets and Apple destroyed the entire market for PC laptops.

Lenovo will never do anything great with the brand. Google had promise.

Pxtl3• 12 years ago

I know this is a fantasy at best, but I keep fantasizing they're doing this so they can have the cash liquid... to buy Nintendo. Or Sony.

I like Google's attitude towards hardware and I want them in the gaming industry.

ricardobeat• 12 years ago

So we can finally get all the AAA titles for free and covered in ads!

snaky4• 12 years ago

Nintendo is on sale?

Last time I checked they declined $25 bln Microsoft offer

pbreit2• 12 years ago

The thing that always surprised me was how quick Google was to get out of the set-top business. That seemed like a pretty incredible opportunity to me.

spinchange• 12 years ago

It seems to me that this must have been the intention all along. When Google purchased them, Motorola was about to start suing other members of the Android ecosystem because they were that desperate. So the deal was always defensive. I think the value of Motorola's IP was always overstated and Google knew that but it made for a good story for shareholders along with Google signalling they were serious about hardware. And maybe they are, but the whole "American made" angle they took and all the tax incentives they got, and for what...to sell the company 7 months after launching a flagship phone??? It's a great phone, but it looks to me like this whole thing was set-up to sell out from the start. If so, it was a brilliant unwinding of something that could have been very bad for Android at a critical time. As others have pointed out, they didn't take as bad a bath financially as it seems either.

The alternative narrative is that they suddenly had a change of heart because of Nest, but why not just integrate or put that team in charge of Motorola if it's about talent?

In any case, the Moto X is a really nice phone. I feel bad for the employees of Motorola and find this maneuvering very "corporate" and un-Googley.

Eye_of_Mordor• 12 years ago

Google are corporate, they were the good guys.

jsz0• 12 years ago

The timing of this (vs. the Google/Samsung arrangement) really makes it look like Google's involvement with Motorola was simply to intimidate Samsung. The message was we'll piss away our advertising revenue to destroy you if you don't do what we want. Short term success maybe but in the long term it puts Google firmly on the Microsoft track. You can only gain so much via intimidation.

notatoad2• 12 years ago

Alternate theory: this is samsung throwing their weight around. Google purchased Moto because they wanted to get into the devices business, Samsung tells google to get rid of it or else they will continue to diverge their ~70% of the android market away from google's version of android.

Google clearly wants to be a hardware manufacturer: they've been circling the market for a while now, trying different things: they bought moto, they bought nest, they keep doing nexus devices, glass, the ever-growing lineup of google play editions, chromebooks... I don't think they bought moto just to be a bully, or just for the patents.

justin663• 12 years ago

It's a tangent but I'm a little disappointed by this latest executive-level assault on the language, from Larry Page:

So until then, it’s business as usual. I’m phenomenally impressed with everything the Motorola team has achieved and confident that with Lenovo as a partner, Motorola will build more and more great products for people everywhere.

http://googleblog.blogspot.com/2014/01/lenovo-to-acquire-mot...

"Partner." Yeah...

72deluxe2• 12 years ago

Very interesting! Lenovo's laptops seem good quality to me.

Hopefully this will make my Atrix and Lapdock more sought after.... and my Xoom..... (perhaps too much Motorola hardware???)

Touche• 12 years ago

My guess is that Google and Samsung have come to some arrangement that will bring them closer. Perhaps Samsung gets more engineers working on Android directly, perhaps Samsung drops S-Voice and some of its proprietary stuff.

mzs• 12 years ago

Any word on if phones will still be assembled in US? Some Moto X models are today.

Lenovo to buy Google's Motorola handset division

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