Yesterday, Lenovo announced that it’s acquiring the Motorola Mobility smartphone business unit from Google. There’s wide-ranging takes on what the acquisition means, but let’s try and clarify some details.
Lenovo was already the fourth-largest smartphone maker in the world, according to research firm IDC. It has greater global market share than HTC, Sony and, yes, even Motorola Mobility. So it didn’t acquire Motorola Mobility for its phones, designs or even US-based factories.
Instead, it acquired Motorola for its strong brand in the premium North American and Latin American markets. The acquisition presented Lenovo with its quickest route to these markets while preserving the Motorola brand just as it did ThinkPad after acquiring it from IBM in 2005.
Lenovo – already the world’s leading PC manufacturer and a strong tablet player – now has a leading position in the smartphone market as well. This makes Lenovo the second device manufacturer with a leading offer across the device trifecta of PCs, tablets and smartphones. And which was the first? Apple.
Additionally, the acquisition offers two significant implications concerning patents and its competition that we won’t get into here but these New York Times and Bloomberg articles offer up thoughts on each.
So what are the three long-term market implications of Lenovo’s acquisition?
- Users will align themselves with device+OS+app preferences that will lock them in for years to come. Apple is the most vertically integrated vendor with its hardware, operating system and software ecosystem. Google leads the game too with Android, Google Glass and its Nexus devices. Amazon offers its Kindle devices that are tightly coupled with its content and services.
- Further industry consolidation is just around the corner. Not every manufacturer will cater to this trifecta of devices. Their hardware businesses will be sold to larger players that can attain scale. And given the duopoly of hardware profits in the smartphone market, the handset makers won’t be immune; other smartphone manufacturers will face acquisition or dissolution.
- Wearables and emerging devices will become the fourth device category that leading manufacturers respond to. This acquisition makes Lenovo a company to watch – and puts HP, Dell, Samsung, Sony, Acer, Asus and Toshiba on notice. The personal device business is consolidating and manufacturers must compete in all three device markets, plus wearable and emerging devices, or get left out of the next market shift.
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