Lenovo announced earlier this year that it will be buying the Motorola Mobility. The company announced today that it has closed the acquisition, and bought the company from Google for a whopping sum of $2.91 billion.
As per the agreement, Lenovo paid Google — which had bought Motorola Mobility back in 2012 for $12.5 billion — a sum of $2.91 billion. If you’re interested in the distribution: $660 million is being paid in cash while $750 million are in the form of Lenovo stocks. The rest $1.5 billion will be paid to Google over the course of the next three years.
Simple arithmetic suggests that Google is on the losing side here. The company is almost losing $10 billion here, right? Not really. The primary reason why Google bought Motorola in the first place was to get access to Motorola’s reservoir of patents that it had accumulated over the years. When Google agreed to sell Motorola to Lenovo, it made a pact that it is going to keep all existing patents.
In today’s age, patents are a very crucial thing. Once you have a patent on a particular technology, you can license it to others for a large chunk of money (depends how useful that patent is). Take Microsoft, for an example. The company makes more money from its Android patents than it makes from Windows Phone, Xbox, Skype, and several other divisions put together.
Now, here’s something interesting about this acquisition that could benefit Microsoft. When Google bought Motorola, the company wasn’t in great shape; it was still going through the transition from feature phones to smartphones. However, under Google’s supervision, it had an obligation to make Android-powered devices, and do everything within the Google ecosystem. Now the company isn’t part of Google, it doesn’t have to worry about what Google thinks of it, and since Samsung is the only major player that is actually making money from selling Android phones, it is not too far-fetched to think that Motorola too may consider making a Windows Phone.
For Lenovo, which is the number #1 PC manufacturer in the world, the acquisition is essentially its ticket to become stronger in the mobile space. The company needs credibility and technology, both of which Motorola can happily provide.