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How will Lenovo/Motorola Mobility deal impact the Channel?

03 Feb 14

Following news that Google has sold its Motorola Mobility smartphone operations to Lenovo for around USD $2.91 billion, a leading industry figure discusses the impact of the acquisition.

Gartner analyst Hugues de la Vergne shares his views on the impact of Lenovo’s announcement to acquire Motorola Mobility below.

What does Lenovo’s acquisition of Motorola Mobility mean for the smartphone market?

The Lenovo acquisition will have a minor effect on smartphone market share, but will have a larger effect on mid-tier smartphone margins in key markets like the U.S.

Motorola Mobility is mainly regionally focused and gets the majority of sales in the Americas with only 1% of WW device sales. Motorola’s market share was primarily its Droid products at Verizon Wireless and its sales in Latin America.

What might Lenovo achieve through the acquisition?

Lenovo’s acquisition makes sense because they want into the U.S. smartphone market, but the market has become saturated. Competition is intense and dominated by Samsung and Apple, who control almost 60% of the US market. This acquisition gets Lenovo to the table with U.S. operators, but it will still be difficult to gain share.

Lenovo will try to leverage the MOTOROLA brand to offer aggressive pricing in the mid/higher end smartphone market to achieve what Huawei and ZTE have not been able to do – move up market from sub-$100, no contract phones.

What effect will Lenovo’s acquisition of Motorola Mobility have on other smartphone OEMs?

Lenovo/Motorola is a legitimate threat to some of the second tier brands like LG, Kyocera and HTC. Lenovo’s threat to Samsung is mostly to put pressure on margins.

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