Lenovo completes Motorola acquisition at $2.91 billion

China's Lenovo Group Ltd (0992.HK) said Thursday it has closed its $2.91 bln acquisition of the Motorola handset unit from Google Inc (GOOG.O), paving the way for a fresh assault on the U.S. smartphone market.

The purchase comes as Lenovo, the world's leading PC maker, ramps up its effort to diversify its business and establish itself as a smartphone maker with global appeal.

Google acquired the iconic smartphone brand and its prized patent portfolio in 2012 for $12.5 billion but struggled to reverse Motorola's years-long decline. Under the Lenovo deal, Google will retain a significant portion of Motorola's patents.

Considering Lenovo is already popular as a smartphone vendor in countries such as China and India along with other South Asian countries, the Motorola handset business is expected to give it a boost as far as the US and European markets go. We had observed how the Motorola acquisition seems just like the IBM moment, when Lenovo acquired IBMs PC business in 2005. Today Lenovo, on the back of the ultrapopular Thinkpad line, is the one of the top PC vendors in the world.  That is certainly not the case with its smartphone division.

One of Motorola's better divisions - the Advanced Technology and Projects Group - will still be a part of Google. Project Ara modular phone - one of the ATPGs most forward looking projects is still under Google. The project comes with a structural frame that holds smartphone modules of the owner’s choice, such as a display, keyboard or say the battery. The approach allows users to swap out malfunctioning modules or upgrade as new innovations emerge. This also means that the handset can potentially last much longer than normal smartphones do. Undoubtedly, it is an interesting project that has the potential to revolutionise the mobile world. Google will reportedly retain all the patents developed by the Advanced Technology group. However, Lenovo will get the license for using these patents. On first look, it seems like Google is returning to its core business of making software, rather than hardware.

(With inputs from Reuters)

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