Loses billions as it sheds Motorola biz that it acquired in only 2012
Google has agreed to sell its handset division to Chinese giant Lenovo less than two years after its foray into mobile phones, ostensibly surrendering to a market that proved too competitive. Under the deal, announced last night [29th January 2013] Motorola Mobility will be sold to Lenovo for $2.91 billion, vastly less than the $12.5 billion Google paid to buy the business in May 2012 when the smartphone patent battles were at their height. Then, Motorola’s trove of 17,000 patents was the main attraction for Google, though its hardware business was seen as an extra incentive, giving Google the chance to make its own branded devices against the likes of Apple, Nokia and BlackBerry.
The Motorola acquisition is thought to have antagonised other manufacturers of Android devices, though.
Meanwhile Google also failed to win over enough consumers for its phones anyway, resulting in the handset division losing $645 million in the first nine months of 2013.
However, under the surprise deal with Lenovo – China’s third biggest phone retailer and which until recently was also thought as a contender to buy struggling Candian manufacturer Blackberry – Google will keep several lucrative patents, including the Android smartphone and tablet software.
The deal to buy the search giant’s smartphone operation, meanwhile, not only gives Lenovo an immediate brand name and some 2,000 patents, but it also comes in a week when it agreed to buy IBM’s low-end server business for $2.3 billion – further marking its incursion into US territory.
*Footnote: Social networking giant Facebook has reported bumper profits for the fourth quarter, with overall revenues leaping 63 per cent mostly on the back of mobile advertising. Profits for Q4 were 30 times higher than for the same period in 2012, coming in at $523 million compared to $64 million previously. Just two years ago Facebook had no revenue from mobile advertising sales, but today – with its army of 757 million daily global users – earnings from the sector account for more than half of all Facebook’s turnover.