Motorola, Google’s Blind Spot
Was Motorola a big blunder for Google? Two years ago Google acquired Motorola for $12.5 billion, and has just announced an agreement to sell Motorola to Lenovo for $2.91 billion. The original acquisition of Motorola has proved to be a heavy financial loss for Google, but a steal on Lenovo’s part.
What was Google thinking? The company originally expressed interest in Motorola because they wanted the security of Motorola patents in order to stand up to Apple and Microsoft in court cases. In Microsoft v. Motorola, the original lawsuit was valued at $4 billion, but ultimately the case closed with Microsoft paying $1.7 million annually. At that rate it would take 3,235 years for the lawsuit to reach the original predicted valuation. Additionally, Motorola’s sales began to drop drastically over the two years.
What was Google’s mistake? Google is a very powerful software company that entered the hardware game just within the last 5 years, while Microsoft and Apply have been hardware giants for a few decades now. Simply put, Google does not have the expertise to defeat two hardware giants in a litigation battle or the expertise to provide Motorola with the hardware support it needs to thrive. Lenovo on the other hand has grown 90% over the past year in the smartphone market, and has many years of experience producing dependable hardware. As Google’s CEO puts it, “Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem.” Google’s original purchase was a misalignment of expertise which led to unforeseen risk.