- Matt Ward
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The Chinese Moto into Chicago
It’s a strange experience to attend a tech conference like I did last Thursday and have no one — not the audience or the speakers — mention the biggest tech story of the year. It’s a little like attending a family reunion and having nobody comment on your Aunt Mary’s 25-year old boyfriend.
Motorola Mobility is being sold by Google to Chinese computer powerhouse, Lenovo. You remember them — the company that bought IBM’s ThinkPad division in 2005. They paid $2.9 billion and it’s for one reason: to enter the smartphone war against Apple and Samsung. It’s the largest ever deal by a Chinese tech company (although a relative bargain when you consider that Google paid $12.5 billion for Motorola — primarily for its patent portfolio which it will license to Lenovo.)
For Chicago, the sale comes weeks away from the biggest real estate move of the last year: Motorola moving more than 2,000 workers into the Merchandise Mart and becoming the biggest tech employer downtown. Lenovo says it will all move ahead with no plans for layoffs.
The reason a Chinese tech behemoth with resources pays for an American company is twofold — brand and know how. “Motorola brings a strong brand, brilliant engineering and strong relationships with carriers and retailers.” said Lenovo CEO Yang Yuanqing.
In a blog for Crain’s Chicago Business, John Pletz spells out the challenges: Today, it (Motorola) has just 1 percent global market share, putting it in 16th place among the top cellphone vendors, according to research firm Strategy Analytics Inc. That’s down from No. 2, with 22 percent share, in 2006, when Motorola’s Razr phone was the must-have device.
After the acquisition, Lenovo will be No. 3, with 6 percent of the smartphone market, which accounts for most of the cellphone industry’s profit, according to Strategy Analytics. Samsung is No. 1 with 32 percent of shipments, followed by Apple, with 15 percent.