Motorola has lost nearly USD two billion since Google took over. The deal that was announced on Wednesday will rid Google Inc. of the financial problems that has plagued the internet company after the purchase of Motorola Mobility for USD 12.4 billion in 2012.

While Google is backpedaling, Lenovo Group Ltd. is gearing up for a major expansion. Lenovo chairman and chief executive Yang Yuanqing had said that the acquisition will immediately make Lenovo a strong global competitor in smartphones.

Already the world's largest maker of personal computers, Lenovo now appears determined to become a bigger player in smartphones as more people rely on them instead of laptop and desktop computers to go online.

"Using Motorola, just as Lenovo used the IBM ThinkPad brand, to gain quick credibility and access to desirable markets and build critical mass makes a lot of sense," said Forrester Research analyst Frank Gillett.

"But Motorola has not been shooting the lights out with designs or sales volumes in smartphones. So the value is simply in brand recognition to achieve market recognition faster - and to expand the design and marketing team with talent experienced at US and Western markets," Gillett added.

Step Back

For Google, the sale represented a solution to a persistent headache as Motorola's losses widened in recent quarters. It also showed Google is willing to step back from the handset arena and throw its weight behind device makers that propagate its Android software, Kantar analyst Carolina Milanesi said.

"It all points to Google thinking in the short run that they're better off betting on Samsung and keeping them close," Milanesi said. "And of course now they're enabling a second strong runner (Lenovo) in the Android ecosystem."

In 2012, analysts saw Google's Motorola acquisition as primarily a way to secure the company's trove of patents amid the technology sector's increasing legal battles - rather than a bona fide push into the handset business.

Many industry observers were surprised that Google did not immediately sell the hardware division after the deal closed, choosing instead to operate Motorola a separate company.

It did sell Motorola's cable television set-top box business to Arris Group Inc for USD 2.35 billion at the end of 2012.

In a blog post on Wednesday, Google's Page highlighted the strategic choice in selling the Motorola handset business.

"The smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices," Page wrote. "This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere," Page further wrote.

Lenovo is being advised by Credit Suisse Group while Lazard Ltd advised Google on the transaction.


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