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Lenovo buy of Motorola strengthens Apple rivals: analysts

30 January 2014, 15:28

San Fransisco - Google's sale of faded mobile phone star Motorola Mobility to Chinese computer titan Lenovo promises to strengthen Apple's rivals at home and abroad, according to analysts.

The US Internet goliath on Wednesday agreed to sell Motorola to Lenovo for $2.91 billion, after a lackluster two-year effort to turn around the smartphone maker it bought for $12.5 billion.

What might appear on the surface to be a money-losing blunder by Google could actually play out as a shrewd maneuver tightening bonds with allies who make Android-powered smartphones and providing Lenovo ammunition to challenge iPhones and iPads in China and other coveted markets.

The Motorola buy provides Lenovo footholds in smartphone and tablet markets where it is eager to gain traction while acting as a peace offering to Samsung and other partners that make devices powered by Google-backed Android software.

"It is win-win," said analyst Tim Bajarin of Creative Strategies in Silicon Valley. "Google keeps the patents and the research group, and they keep partners off their back, while Lenovo gets what they need to get into the US smartphone market."

The sale of Motorola to Lenovo was announced just days after Samsung inked a long-term cross-licence deal with Google to help the South Korean technology firm stave off patent disputes.

Google is keeping the patent portfolio believed to have been its original target in the acquisition.

Samsung stands to benefit from protection offered by Motorola patents, which analysts believe turned out to be much less valuable than Google thought.

Almost all of Samsung's smartphones and tablet computers are powered by the Google's Android software, and Google's entry into the handset arena with the purchase of Motorola drove a wedge between the partners.

"The combination of a Samsung-Google peace pact and Motorola going to Lenovo means that Samsung has pledged allegiance to Google's Android," Forrester analyst Frank Gillett told AFP.

"From Apple's point of view, this means Samsung will remain strong but tight with Google, and the aspiration of Lenovo to become like Samsung and to be even stronger in emerging markets starting with its position in China."

Silicon Valley analyst Rob Enderle of Enderle Group suspects that Google would welcome Lenovo's mobile gadgets business growing big enough to offset the dominant position achieved by Samsung when it comes to Android smartphones and tablets.

"Google was not happy with Samsung owning the Android market," Enderle said.

Lenovo also appears bent on casting actor Ashton Kutcher, who played Steve Jobs on screen, in the role of a company pitchman molded after the public persona of Apple's iconic co-founder.

"Lenovo is going to try to turn Ashton Kutcher into a Steve Jobs-type guy, and it is going to be fun to watch," Enderle predicted.

Hollywood actor Kutcher donned a "Lenovo product engineer" badge for a presentation late last year in Los Angeles unveiling a Yoga Tablet.

"Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem," Google chief executive Larry Page said in a statement.

Lenovo chairman and chief executive Yang Yuanqing said the acquisition "will immediately make Lenovo a strong global competitor in smartphones."

While Google will be taking a loss on the sale, it did spin off the Motorola Home division for $2.3 billion in 2012 and sold off some of its manufacturing facilities.

"Google got what they wanted and needed from Moto -- they got patents, engineering talent and mobile market device insight," said technology analyst Jack Gold.

"They don't need to be in the device business... This is a win for Google and a win for Lenovo in my opinion."

But analyst Ramon Llamas at research firm IDC said the deal still leaves a hole of about $7 billion for Google.

"Are the patents worth $7 billion? I don't know but that is a big question," Llamas told AFP.




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