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Motorola Deal Gets Lenovo Into U.S. Smartphone Biz

1/30/2014 07:00:00 PM Eastern

MOUNTAIN VIEW, CALIF. – Google agreed to sell its Motorola Mobility cellphone business to PC maker Lenovo in a $2.91 billion deal that will give the world’s largest PC maker a presence in the U.S. cellphone business.

Lenovo’s move will supplement its cellphone sales that take place outside the U.S.

For Google, the sale of its money-losing Motorola operation only 22 months after acquiring it for $12.5 billion will ease potential concerns by licensees of Google’s Android smartphone OS that Google was competing against them in the handset business and played favorites with Motorola.

With the deal, Google said it will keep the “vast majority” of the Motorola Mobility patents, one of the key reasons for its acquisition of Motorola Mobility in May 2012.

Under the terms of the deal, Lenovo gets Motorola Mobility’s brand and trademark portfolio, Motorola’s smartphone portfolio, ownership of Motorola’s product roadmap, a license to Google’s smartphone patent portfolio and other intellectual property, and more than 2,000 patent assets.

Google said Motorola is currently the No. 3 Android smartphone manufacturer in the U.S. but Motorola’s has posted operating losses every quarter under Google ownership.

Analysts see the acquisition giving Lenovo the scale to compete more effectively in cellphones.

“Lenovo now has extra scale in smartphones and a seat near the top table,” said Strategy Analytics.

With the acquisition, the combined entity of Lenovo and Motorola captured a 6 percent share of global smartphone shipments in 2013, making it the world’s third-largest smartphone vendor by volume behind Samsung at 32 percent and Apple with 15 percent, Strategy Analytics said.

Independent analyst Jeff Kagan said the Motorola brand “may be older and tired, but it does have one of the strongest and most respected brand names in the business. If Lenovo can freshen up the Motorola brand, and merge the ideas and thinking they currently use in their smartphones with Motorola, they could indeed create a very strong new competitor.”

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