Motorola going to Lenovo but Google got more than its money’s worth

Motorola going to Lenovo but Google got more than its money’s worth

Google & Motorola: credit - iMore

By now, you’ve all heard about Google’s sale of Motorola (or at least a good part of it), to Lenovo, for about $2.9b – only a few years after paying $12.5 billion for the company and you’ve no doubt heard a lot of people saying how badly Google used this valuable asset.

Well Gordon Kelly, over at Forbes Magazine, has another take on it – and it makes a lot of sense: mostly because he’s right.

Kelly contends that Google got exactly what they wanted out of Motorola – control over Android is now out of Samsung’s hands and back in Google’s.

As we all know, the key player in the Android market is Samsung – they take about 80% of the market right now. They also cover Android with their own skin: Touchwiz, as well as a plethora of gimmicky apps and chintzy iOS knock off reworkings of core Android features, like the un-inventively named sCal. It’s also no secret Samsung has been working – hard – on Tizen and their soon to be released Tizen handsets also use Touchwiz as the interface, making them seem pretty much the same as Android, to people who don’t really know how to tell the difference.

There’s no question Samsung was seeking to break free from Google’s version of Android in the nearish future and divert customers over to their own app-store (presumably to be called the sTune Store).

So with Samsung degrading Android with the bloated and unpopular Touchwiz, as well as clearly laying the groundwork for an Android exodus, Google went into negotiations with the Korean company and it appears they threatened to absolutely turn up the steam on Motorola, using heavy subsidies and immense marketing; if not also their patent portfolio.

The gambit appears to have worked – Samsung and Google signed a 10 year deal that allows them to share patents but also forces Samsung to back off on their own apps, come back to stock Android apps, instead of using their own and tone Touchwiz down. Google then sold Motorola two days later; with the job done.

Finally, Kelly addresses the supposed $10b loss Google made on Motorola and points out this is bad on both bad maths and ignoring all other factors.

Firstly, Google paid $12.5b for Motorola and yes, they then sold (part) of it to Lenovo for $2.9b. However Motorola had $3.2b in cash, which Google is keeping, plus they also already sold a different Motorola division in 2013 for $2.5b – and Google also cleared $2.4b in deferred tax assets from the deal. So in reality, Google paid around $3b and came away with $5.5b in patents, assets and cold, hard cash.


This article also appears on Android Analyse.

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RodneyI'm a veteran of way too many years of IT (although I still love it) and I currently head up the techincal work over at Host One (major sponsor of this site), where I'm also a partner. Feel free to ask me anything about Cloud Computing and I'll try to be helpful, in a non-salesy kind of way.View all posts by Rodney →

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