Home > Mobile > And why Lenovo Acquired Motorola Mobile ? Insider’s Insight

And why Lenovo Acquired Motorola Mobile ? Insider’s Insight

February 11th, 2014

SmartPhone Sales to Hit 1 Billion in 2013Lenovo will acquire 100% of the Motorola Mobility business including mobile devices, 3,500 R&D staff, the Moto brands (Moto X and Droid) and licenses to the rich Google/Moto mobile patents with ownership of over 2,000 additional patents. The total price tag is US$2.91bn including US$660mn in cash, US$750mn in Lenovo stock and US$1.5bn three-year interest-free promissory notes.

Why Lenovo Made A Desperate Bid for Motorola ?
We believe the key motivations for Lenovo to acquire Moto were – IP protection in developed markets and the highly recognizable Moto brand. Lenovo’s weak IP portfolio has been one of the key challenges for its smartphone sales into developed markets (i.e. avoid getting into similar types of IP litigation as seen between Apple and Samsung).

The Deal certainly comes at a hefty price. When considered as a ticket to entry into the developed-world smartphone market where most of the industry profitability resides, the motivation becomes clear. We are cautious about Lenovo’s smartphone profitability outlook post the Moto acquisition, but by removing major roadblocks, it does open up the door for longer-term success.

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