Video: Business update from Motorola ahead of £1.8b Lenovo sale

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Motorola’s top brass provide an update on future products and its proposed £1.8 billion sale to Lenovo

Mobile News was invited to listen and discuss the past, present and future of the brand following Google’s decision to sell the struggling business to Lenovo for £1.8 billion.

The event, which, which took place in Barcelona last Tuesday, February 25), was hosted by  by Gartner analyst Carolina Milanesi and include discussions with (from left to right) Motorola senior VP of software engineering Steve Horowitz, senior VP  supply chain and operators Mark Randall and senior VP of product management Rick Osterloh.

Topics covered included Motorola’s achievements in the past year (Moto G, Moto X),  its relationship with Google, Lenovo’s plans for the Motorola brand and  impending products launches including its entry to the smartwatch space in the coming weeks.

 

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Industry reaction to Motorola sale plans 

Google’s sale of Motorola to Levono came as a surprise not just to theMobile News team but also to all the analysts we spoke to. And not just because we usually get wind of these things months in advance.

It was surprising because, with the state Motorola is in, you have to question why Lenovo would want to buy it. It didn’t even buy the good stuff (Google is holding on tight to 7,000 patents) but just the handset side.

And in terms of direction, the two companies really could not be more different.

Motorola currently has a global smartphone market share of one per cent, which means it doesn’t feature in the top 10.

Lenovo ended 2013 as the world’s fourth largest smartphone manufacturer with 4.6 per cent, having shipped 13.2 million units in the last three months of the year alone. This represents year-on-year growth of over 47 per cent, compared to Motorola, which saw its market share cut in half.

Now, Motorola is still doing ok in its home market, the US, where it is currently the third largest with 6.7 per cent. It is – just about – ahead of LG which has 6.6 per cent of the US market and has a little head start on HTC, which only has 5.7 per cent.

So it’s not completely crazy to assume Lenovo sees Motorola as its “foot in the door” when it comes to the US market. However, this is a risky bet as even in its home market – where it has a long history as an electronics manufacturer – Motorola has been in decline for several years. In fact, it’s falling quite quickly – down from 9.1 per cent to 8.5 per cent in the first three months of 2013 alone.

This means Lenovo – on top of the £1.7 billion it paid for it – will have to spend some serious money turning Motorola around. Google spent £182 million restructuring it, much of this going to staff who were asked to leave. How much will Lenovo feed into what seems like a black hole? It’s a high price to pay for a ever-diminishing slice of the US market and an almost non-existent slice of the global one.

Does Chinese Lenovo need a western-known brand that badly? Yes, 95 per cent of its handsets are currently sold in China, but the western market is hardly xenophobic when it comes to electronics (a notable exception being the US and Huawei). Just look at Korean Samsung’s global success, and at Huawei, which is not only creeping up behind Apple in terms of shipments (almost 50 million in 2013, up 68 per cent) but is building the UK’s largest 4G network.

Lenovo shares many similarities with Samsung in that it has the whole package – TV’s and laptops as well as handsets. Analysts agree a “multi-screen” offering is the key to future success in the smartphone market.

On the other hand, £1.7 billion has bought Lenovo a lot of press coverage, placing it on the map. For the first time, Mobile News is speaking to the manufacturer at Mobile World Congress (MWC) this month.

And the Motorola brand is useful in terms of credibility if not financially. It solidifies Levono’s relationship with Google, a friendship it needs because of Android’s success as an operating system. The cynic in me would also point out that as part of the deal, Lenovo and Google made a 10-year patent licensing agreement – so maybe this is all just about trying not to get sued over breach of IP.

 

 

 

 

 

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