3 Reasons Lenovo's Purchase of Motorola Will Succeed Where Google Failed

Google just sold Motorola to Chinese tech giant Lenovo for $2.9 billion. Here are 3 reasons that Lenovo could succeed where Google failed.

Jan 31, 2014 at 3:15PM

Google (NASDAQ:GOOGL) just sold Motorola Mobility, one of its worst acquisitions ever, to Chinese tech giant Lenovo (NASDAQOTH:LNVGY) for $2.9 billion -- a steep discount from the $12.5 billion it had paid for the company back in August 2011.

Lenovo gets the entire Motorola brand, including the recently launched Moto X and Moto G handsets, as well as more than 2,000 patent assets. Google, however, will retain the majority of the Motorola's original patent portfolio.

Moto G Vs Moto X Full

Moto G (L) and Moto X (R). (Source: Blogscomputerworld.com)

This is a humbling move for Google and a thrilling new development for Lenovo, which has grown into the world's largest PC manufacturer through the acquisitions of IBM's (NYSE:IBM) personal computer and low-end server businesses, leaving Hewlett-Packard (NYSE:HPQ) in the dust.

There are doubts regarding Lenovo's ability to revive the Motorola brand, which at its peak (2006) accounted for 22% of the mobile phone market, but I truly believe that Lenovo will do a much better job than Google at rebuilding the fallen brand's reputation in the mobile marketplace.

Let's take a look at the three top reasons:

1. A solid reputation of transforming brands

We're all too familiar with Hewlett-Packard's excuse for its poor performance over the past three years: the rise of smartphones and tablets have turned its traditional business model of personal computers upside down.

While it's true that global PC shipments fell 10% year-over-year in 2013, Lenovo has survived unscathed:


Global market share (4Q)

YOY growth in shipments










Acer Group



Source: IDC.

IDC's numbers strongly indicate that Lenovo's gains in a shrinking market were made at the expense of its rivals. Therefore, although PCs might not be that appealing anymore, Lenovo's products -- especially its hybrid devices -- are still winning over customers.

None of this would have been possible if it weren't for Lenovo's 2005 acquisition of IBM's personal computer business for $1.25 billion, which added IBM's iconic ThinkPad brand to its portfolio.

Lenovo Laptop Convertible Thinkpad Yoga Silver Front

Lenovo's ThinkPad Yoga. (Source: Lenovo)

Over the years, Lenovo transformed the ThinkPad brand from a stodgy line of business laptops into a fresh line of hybrid devices, convertible laptops, and tablets -- most of which were well received commercially and critically:


Release date

Form factor

CNET rating

ThinkPad Yoga




ThinkPad Twist




ThinkPad Helix




ThinkPad Tablet




ThinkPad Tablet 2




Yoga Tablet




Sources: Cnet.com.

Lenovo also put its entire line of traditional laptops through the redesign blender from 2012 to 2013, in an effort to streamline its designs and make them more appealing to business users. In other words, whereas Apple (NASDAQ:AAPL) tried to make consumer electronics cool again, Lenovo tried to make business laptops more aesthetically pleasing.

Therefore, it's reasonable to assume that Lenovo has a similarly ambitious plan in mind for Motorola that could dwarf Google's Moto G and Moto X efforts.

2. An established footprint in mobile hardware

According to IDC, Lenovo is currently the fourth largest smartphone maker in the world, with a 4.9% share of the global market, up from 4.1% a year earlier.

Combining its share with Motorola's tiny sliver of the market bumps Lenovo share up to 6.4%, making it the third largest manufacturer after Samsung (NASDAQOTH: SSNLF) and Apple.

Lenovo Smartphone Ideaphone K

Lenovo's K900 Android smartphone. (Source: Lenovo)

Although Lenovo's share is still dwarfed by Samsung's 28.8% and Apple's 17.9%, shipments of its mobile devices surged 50% year-over-year last quarter.

Lenovo is the only major Wintel PC manufacturer that has successfully dented the smartphone market. Previous efforts by Hewlett-Packard, Dell, Acer, and Asus have failed due to poor designs, bad market timing, or poor marketing efforts. Lenovo's smartphones succeeded for two simple reasons -- they arrived fairly early (2009) and went with Android.

Lenovo smartphones aren't widely used in the U.S., but they account for 11.8% of China's lucrative smartphone market, putting it ahead of Apple (6.2%) but behind Samsung (21.2%).

Claiming the well-known Motorola brand could help Lenovo finally grow its U.S. smartphone market share as well.

3. Marketing muscle and celebrity wattage

Lenovo also has the marketing muscle to succeed where Google failed.

Google's $500 million U.S. marketing blitz for the Moto G and X yielded mixed results, including the bizarre "Lazy Phone" ads and some sexually charged ads encouraging people to "touch each other" instead of their phones.

Google's clumsy ads looked much sloppier than Apple's minimalist approach and the crisp and catchy "Hello Moto" ads that Motorola was once known for.

Lenovo, by comparison, has hired both Kobe Bryant and Ashton Kutcher as its spokesmen.

Lenovo even gave Kutcher a real role as a product engineer at Lenovo, where he offers hardware and software design advice. Regarding the role, Kutcher stated that he wanted to help make Lenovo's "products as consumer-friendly as possible."

After Playing Steve Jobs Ashton Kutcher Is Now A Product Engineer For Lenovo Tablets

Ashton Kutcher channeling Steve Jobs as Lenovo's new product engineer. (Source: Businessinsider.com)

It's a gimmicky but inspired choice, considering Kutcher's own interest in tech investments and his recent role as Apple founder Steve Jobs in Joshua Michael Stern's biopic Jobs.

By hiring Bryant and Kutcher, it's clear that Lenovo wants to be identified as a mainstream U.S. company. Now, with a more recognizable brand like Motorola under its belt, Lenovo will put much more effort into its marketing efforts than Google ever did -- and that could finally make Moto relevant again.

The bottom line

Looking forward, will Lenovo follow through with Google's strategy of only marketing a lower-end handset (Moto G) and a higher-end one (Moto X), or will it split the brand into a wider range of phones, similar to the strategy employed by countless other Android handset manufacturers?

One thing remains certain, however -- Lenovo's acquisition of Motorola could shake up the handset industry the same way its acquisition of IBM's personal computer business did to the PC market. Just as HP and Dell eventually yielded to Lenovo in the PC arena, so could Apple and Samsung in the smartphone race over the next few years.

What do you think, dear readers? Will Lenovo succeed with Motorola where Google failed? Please share your thoughts in the comments section below!

Want to learn more about the smartphone industry?

One company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

Leo Sun owns shares of Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers