Lenovo’s Motorola purchase: bargain or bane?

IHS shares its insights on the Chinese company’s latest acquisition

Tags: ChinaGoogle IncorporatedIHSLenovo GroupMergers and acquisitionsMotorola Mobility (www.motorola.com)USA
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Lenovo’s Motorola purchase: bargain or bane? Ian Fogg, director, Mobile and Telecoms, IHS Technology.
By  Ian Fogg Published  January 30, 2014

2. Brand assets

Motorola is a familiar consumer brand in mobile across the Americas. However, in Europe, emerging markets and Asia, its mobile market share is tiny and its brand a hindrance, not an asset. While Motorola originally kickstarted Android adoption in the US through distribution on Verizon's network under the DROID brand, outside the US HTC's Desire played that role, and Motorola failed to establish its smartphone portfolio. Lenovo is right to plan to use the Motorola brand in the US, but its own brand in China and emerging markets.

3. Mobile engineering expertise

Motorola has experience appealing to international tastes, compatibility with US 4G networks, and numerous carrier networks. Plus, Motorola has deployed a mass customisation model with the Moto X and its numerous factory finishes. While Lenovo is a very successful mobile handset maker already, its strength is in China, where it ranked second in smartphone shipments in 2013 with a 12.7% share; only Samsung was ahead with a 14.9% market share.

4. A stronger Google relationship

The current Motorola Mobility executive team are largely Google insiders who stepped over after Google's purchase. If Lenovo can retain them, their knowledge of Google will help Lenovo's overall Android business.

Escape

But for Google, this deal is an escape from a difficult business position. When Google bought Motorola Mobility in August 2011 for $12.4bn, Motorola had 3% global handset market share. Now, it's around 1%. Despite well-received smartphones such as the Moto X, Motorola has suffered from a lack of attention from Google, under-investment, and weak marketing spend compared with the smartphone market leaders. Google has been too focused on Android's overall performance and on intellectual property battles, to give Motorola the support it needed to turn around a struggling business.

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