Lenovo has been named in recent years a potential buyer of BlackBerry or HTC. While these rumours were never confirmed, it's clear the company is eyeing a leading role in the global smartphone market. The takeover of loss-making Motorola Mobility from Google (or at least a major part of the company, sans patents), is expected to contribute to Lenovo's goal.
According to Lenovo, the acquisition will add to its market share in the US, Western Europe and Latin America. These are the few areas where Motorola has maintained a presence, although its market share is tiny even there. In the US, its biggest market, its share is at around 7 percent. Since its takeover by Google, Motorola Mobility has launched a handful of new phones, including the latest models Moto X and Moto G, and while these were well-received, they were not mass-market successes.
This appears to have been enough for Google to let the loss-making company go. While earning a profit from Motorola was never a priority for Google, Lenovo will be more focused on growing the company's sales and turning it profitable. This will be a difficult task - in the last quarter of 2013, Google reported a more than doubling in Motorola's operating loss to USD 384 million from USD 152 million a year earlier.
Lenovo will integrate Motorola Mobility in its new organisational structure, which will also include IBM's server business. Form April, Lenovo will have four divisions: PC Business Group, Mobile Business Group, Enterprise and Ecosystem & Cloud Services. Motorola Mobility will be included in the Mobile Business Group, where it will need to prove its value.
That value is currently centred on the Motorola brand, and its "made in the USA” credentials are expected to help Lenovo gain access to the important American high-end market, the emerging Latin American markt and to a lesser event, Western Europe.
However, the change in owner at Motorola may not make much difference to consumers. Lenovo's own success to date has been limited to the low-end and mid-range segments of emerging markets, especially China, where it generates around 90 percent of its handset sales. In any event, Lenovo should at least be more pro-active at Motorola than Google was.
