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Everyone's a winner from Google's sale of Motorola to Lenovo

Analysis A good week at the office for the three firms
Fri Jan 31 2014, 10:43
Motorola Moto X with Android 4.4 Kitkat

COMING AS A COMPLETE SURPRISE, Google's sale of Motorola Mobility to Lenovo has sent shockwaves through the mobile technology industry.

News of the transaction caused a quick reappraisal of competition in the mobile phone industry. It soon emerged that Google had wanted for some time to unload the brand it acquired in 2011. Having nursed Motorola back to some semblance of health and overseen the release of two Android phones that have been well received, it was time for Google to place Motorola Mobility in other hands. The $2.91bn deal will have many ramifications across the industry, not least of all for Google.

In these times of patent trolling, buying what was a failing company like Motorola whose glory days seemed to have passed made more sense because of the intellectual property it held - patents are power in the mobile phone industry.

You only have to look at the parts of Motorola that Lenovo didn't get - The Project Aria modular phone and most of patents both granted and pending. With those mobile patents, Google will in a sense keep Motorola's soul.

It can be no coincidence that this week has seen closer ties forged between Google, Samsung and Sony. These patent sharing agreements draw on the leverage that Google has in owning a raft of mobile patents, but free of the manufacturing division. This should make competitors realise that cooperating with Google, rather than opposing its vision for Android, is well advised.

Lenovo will acquire around 2,000 patents, however, and the rights to use the Motorola name which will give it a valuable foothold in major markets. While Lenovo, whose buying spree has also extended to another huge chunk of IBMs business recently, has a small part of the tablet market, it is virtually unknown as a phone manufacturer.

Lenovo buying Motorola also gets Google off the legal hook. Litigation between the company and Microsoft over patents has been going on for some time and if appeals fail, Motorola will owe Microsoft a minimum of $14.5m. However, Lenovo has a longstanding patent sharing agreement with the Redmond software cobbler, which will now see that litigation magically disappear, saving a lot of legal costs.

So, what next for the Motorola brand? Well, at least to begin with, it will be in for some patent trolling from Android makers that aren't aligned with the thaw in relations in the Android ecosystem.

HTC and LG, for example, will be watching the next Motorola handset like a hawk for any hint of patent transgressions, and off to court they'll go to fight another long legal battle over screen animations or font sizes.

Unless of course, Lenovo, now with a more or less clean slate, allows itselt to be courted by Microsoft. Could we see Motorola and Microsoft become partners? The licensing is in place. The pitch is clear, and we already know that Microsoft is looking for new Windows Phone makers as it prepares to possibly phase out the Nokia brand.

So this leaves the players in a rather bizarre, but positive situation. Google, the company that sold Motorola for $9 billion less than it paid for it is in fact a winner, as its patent leverage has allowed it not only to forge strategic alliances, but bring back Samsung into line. Motorola is a winner as it has a future as part of a major electronics manufacturer with ambition, and has patent agreements in place that will make its legal troubles go away. And Lenovo is a winner because it is getting an established brand to take into major western markets and gain a foothold to give other mobile manufacturers a run for their money.

All in all, for Google, Lenovo and Motorola, it was a good week at the office. µ

 

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