Google has just sold Motorola to Lenovo.
In a shock move that wasn't really predicted by anyone, Larry Page, Google CEO, has offloaded the company to the Chinese firm less than three years after it bought it. We decode his open letter on the sale, hypothesising what the announcement really means.
We’ve just signed an agreement to sell Motorola to Lenovo for $2.91 billion. As this is an important move for Android users everywhere, I wanted to explain why in detail.
We are sure you are shocked, so we thought we would spend some time explaining so you don't get too freaked out.
We acquired Motorola in 2012 to help supercharge the Android ecosystem by creating a stronger patent portfolio for Google and great smartphones for users.
It seemed like a good deal at the time.
Over the past 19 months, Dennis Woodside and the Motorola team have done a tremendous job reinventing the company.
No, really they have.
They’ve focused on building a smaller number of great (and great value) smartphones that consumers love. Both the Moto G and the Moto X are doing really well, and I’m very excited about the smartphone line-up for 2014.
It's true we are, but we worry that our partners are getting restless including Sony, LG, Samsung and HTC.
And on the intellectual property side, Motorola’s patents have helped create a level playing field, which is good news for all Android’s users and partners.
It turns out that was the real reason we bought Moto in the first place, but we only just realised that now.
But the smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices.
Although we thought that hardware was a good thing, forget buying Nest for a moment, it turns out that really we don't fully understand how all that customer service bit works.
It’s why we believe that Motorola will be better served by Lenovo - which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world.
Having turned down BlackBerry, they were keen to buy something, and we spotted that, so here we are.
This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere.
Unlike Apple, it's not about selling hardware, it's about getting more screens in front of people so we can serve them adverts.
As a side note, this does not signal a larger shift for our other hardware efforts.
Please ignore the fact that we bought Nest for more money than we are selling Motorola, and that this just shows it was all about the Nest data rather than its ability to make products.
The dynamics and maturity of the wearable and home markets, for example, are very different from that of the mobile industry.
We are keeping that bit.
We’re excited by the opportunities to build pretty commonplace new products for users within these emerging ecosystems.
That's why we are keeping that bit.
Lenovo has the expertise and track record to scale Motorola into a major player within the Android ecosystem.
It's done really well in the PC market, so hopefully it will do really well in the phone market, and don't forget Hugo Barra, the previous head of Android, left for a Chinese phone manufacturer.
They have a lot of experience in hardware, and they have global reach.
They are big in China, everyone loves China at the moment.
In addition, Lenovo intends to keep Motorola’s distinct brand identity - just as they did when they acquired ThinkPad from IBM in 2005.
Many people will still think we own the brand.
Google will retain the vast majority of Motorola’s patents, which we will continue to use to defend the entire Android ecosystem.
Did you not realise that's why we bought Motorola in the first place? Let's hope Microsoft don't realise that they don't currently have a deal with Lenovo for mobile, but that's not our problem.
The deal has yet to be approved in the US or China, and this usually takes time.
Hopefully it will go through, but you never know, the Canadian government vetoed the Lenovo BlackBerry deal.
So until then, it’s business as usual. I’m phenomenally impressed with everything the Motorola team has achieved and confident that with Lenovo as a partner, Motorola will build more and more great products for people everywhere.
But really I am not that impressed otherwise I wouldn't be selling would I?
Posted by Larry Page, CEO