Motorola deal to boost Lenovo’s presence in smartphone markets

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Google initially bought Motorola for its patents

In Part 1 of this series, we looked at Google, Inc.’s (GOOG)(GOOGL) intention to leverage the growth of the Indian smartphone market by using the Android One operating system in low-cost smartphones.

Lenovo Group Ltd. (LNVGY) completed its acquisition of Motorola from Google on October 30, 2014. It was a $2.91 billion deal that had been announced earlier this year.

Smartphone market share_Q3 2014

Google initially bought Motorola Mobility for $12.5 billion in 2012, its largest acquisition to date. Google’s main objective in acquiring Motorola was to obtain ownership of its huge trove of patents. It would use these patents to legally protect Android against the likes of Apple Inc. (AAPL) and Microsoft Corporation (MSFT). And despite Motorola’s sale to Lenovo, Google kept these patents to itself.

Since 2012, Google has turned Motorola into a lean company with just a few product lines that focus on emerging markets. As you’ll recall from Part 1, Motorola has made significant inroads in the Indian smartphone market with the help of its Moto G and Moto E smartphones.

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Motorola deal will help Lenovo become a stronger global player

Lenovo acquired Motorola because it will help Lenovo to both strengthen its position in emerging markets, and help grow its presence in developed markets. The Motorola deal will help Lenovo overcome the threat from Xiaomi, which recently emerged as the third-largest smartphone player in the world.

According to a report from market research firm IDC, and as the chart above shows, Xiaomi overtook Lenovo in the global smartphone market last quarter. The same report observes that although Samsung and Apple are the top two players in the world, smaller players are winning market share.

To learn more about Xiaomi, read Market Realist’s Why Samsung lost its top smartphone position to Xiaomi in China.

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