Google keeps patents as it sells Motorola to Lenovo
By kateoflaherty, Jan 30 2014 09:44AM
When Google bought Motorola in 2011 for $12.5bn, its other hardware partners were paranoid. Would they still get the same share of the Android ecosystem? Perhaps the software giant would prioritise Motorola, or use it to launch a succession of own-brand Google phones.
But Google kept Motorola separate, using LG and Asus to make the hardware for its Nexus devices. Meanwhile, it launched two Motorola smartphones, the Moto X and Moto G. Both suffered from poor sales and in the December quarter, Motorola posted an operating loss of $248m.
Perhaps this was the last nail in Motorola's coffin, as last night, Google announced it had sold the smartphone brand for $2.9bn. Google CEO Larry Page said in a statement that the software company would keep Motorola's patents, which it would "continue to use to defend the entire Android ecosystem" - a thinly veiled reference to Microsoft.
So Google didn't really lose $9bn when it sold Motorola; this is simply the price it paid for the majority of its17,000 patents. Google is primarily a software company, with hardware partners, and makes its money through advertising and getting its ecosystem in as many hands as possible.
On the hardware side, the firm is also concentrating its efforts on wearable technology such as Google Glass. Earlier this month, it bought smart home device manufacturer Nest for $3.2bn, possibly for the data the company holds.
Meanwhile, along with gaining 2,000 patent assets, Chinese firm Lenovo acquires the strength of the Motorola brand in markets such as the US, where it is aiming to increase share. Lenovo has already had success there with the ThinkPad brand, which it bought from IBM in 2005.
It seems the sale was a move to suit all parties. Lenovo, which was apparently prevented from buying ailing BlackBerry by the Canadian government, gains the foothold it wants in the US mobile market. Meanwhile, Google retains Motorola's patents and frees itself of the albatross that was pulling its revenues down.