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With Motorola sale to Lenovo, Google is unloading a headache

Stephen Lawson | Jan. 30, 2014
By selling Motorola Mobility to Lenovo, Google is ending a combination that never really worked out while keeping assets that could prove valuable down the road.

As weak as Motorola is in the global handset sweepstakes, it could be a valuable asset for Lenovo as the Chinese company tries to expand its phone business outside of China. Lenovo had 5.1 percent of the world market in the third quarter, according to Gartner, but its name is not as well-known as Motorola's.

With Motorola, Lenovo will get global name recognition but not global distribution, Greengart said: Motorola's sales are mostly concentrated in North America and Latin America.

However, the ailing phone maker's products are actually good, Greengart said. Motorola has found a niche with smartphones that extend pure Android without smothering it in add-on features such as a Motorola calendar or phone application, he said. Also, the company has tuned its products for a set of consumer preferences — a "just right" strategy — rather than making the biggest or fastest handsets.

The challenge has been getting that message across to consumers, and Lenovo will inherit that problem, Greengart said. Still, Lenovo has a proven track record of adopting a U.S. brand, the successful Think line of laptops that the company acquired from IBM in 2005.

"This gets Lenovo into the U.S. and at the table with U.S. operators," Gartner analyst Hugues de la Vergne said in an email interview. "The opportunity for Lenovo is to provide lower cost smartphones, since operators are aggressively trying to get their subsidy costs under control."

But the jury is still out on whether it can succeed. "The U.S. is very competitive and it will be an uphill battle for Lenovo to gain significant share in a market dominated by Samsung and Apple," he said.

 

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