Google announced late on Wednesday its plans to sell its Motorola Mobility unit to Lenovo for $2.91 billion. The timing couldn't have been more perfect, either. The company reports fourth quarter earnings today and won't have to mention much about hardware profit margins and whether the smartphone unit can make money, according to ZDNet.
This is Lenovo's second major deal in the U.S. in a week, according to Reuters. The Chinese electronics company seems to be angling to get a foothold in major global computing markets. In fact, Lenovo announced last week that it plans to buy IBM's low-end server business for $2.3 billion.
The sale itself actually represents a massive shift in the smartphone market, according to InformationWeek. In fact, Google CEO Larry Page called the deal an "important move for Android users."
Google first purchased Motorola for $12.5 billion in 2012. Even then, though, it was perhaps not the wisest move. While the deal was about patents, Google had to deal with a home business that was divested, according to ZDNet. It had a handset business that was sold to Lenovo and manufacturing assets that were largely divested. This latest deal marks the end for Google's short-lived foray into making consumer mobile devices, according to Reuters.
Strategically, the move makes sense. Google has never been a hardware company, despite the fact that it sells Google-branded electronic devices, according to InformationWeek. That said, Google will still retain ownership of Google Glass and Nest.
"It all points to Google thinking in the short run they're better off betting on Samsung and keeping them close," said Carolina Milanesi, Kantar analyst, in an interview with Reuters. "And of course now they're enabling a second strong runner (Lenovo) in the Android ecosystem."
How well this deal pans out for Google remains to be seen. But so far, it looks like it was a smart move.
