Google Sells Motorola to Lenovo Larry Page Yang Yuanqing
Google's co-founder Larry Page shakes hands with Lenovo CEO Yang Yuanqing after the search giant agreed to sell Motorola to the Chinese company for $2.91 billion. Twitter/@Google

The Chinese PC, smartphone and tablet manufacturer Lenovo has purchased Motorola Mobility from Google in a deal worth $2.91 billion (£1.76bn) - but Google will retain possession of the valuable patent portfolio.

Google purchased Motorola for $12.4 billion just two years ago in a deal which was seen as a major move by the search giant into the hardware business.

However according to industry analyst Benedict Evans the net price was actually $7.15bn with the patents valued at $5.5bn, meaning Google could have made a slight profit on this deal.

Lenovo, the world's largest PC manufacturer, is a company with eyes on gaining a much bigger foothold in the profitable smartphone market.

According to IDC's latest figures Lenovo was the world's fifth largest smartphone manufacturer in the final three months of 2013, though this is mostly thanks to sales of its own-brand smartphones in China and other emerging markets.

Foothold

Announcing the shock announcement deal, Google said the purchase of Motorola will see Lenovo "gain a strong market presence in North America and Latin America, as well as a foothold in Western Europe," to complement its smartphone business in emerging markets.

The cut-price deal will see Lenovo acquire Motorola brand and Motorola Mobility's portfolio of smartphones such as recent devices like the Moto X and Moto G - along with the Droid Ultra. In addition to current products, Lenovo will also take ownership of the future Motorola Mobility product roadmap.

This move will enable Google to devote our energy to driving innovation across the Android ecosystem
- Larry Page, CEO of Google

However Google will retain ownership of the huge trove of Motorola patents, which was seen at the time of its purchase in 2012 as the main reason the company paid so much for Motorola.

Google said it will maintain ownership of "the vast majority of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures."

As part of the deal Lenovo will receive "a license to this rich portfolio of patents and other intellectual property."

Driving innovation

Larry Page, Google co-founder and CEO said the move will "enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere."

Google had been expected to completely overhaul the Motorola smartphone portfolio and while it has made some changes, the companies remained as almostly completely separate entities.

Rich portfolio of patents

Lenovo had been linked with a possible purchase of the struggling BlackBerry brand in recent months, but Yang Yuanqing, chairman and CEO of Lenovo, said this deal will make his company a "strong global competitor in smartphones".

"We will immediately have the opportunity to become a strong global player in the fast-growing mobile space. We are confident that we can bring together the best of both companies to deliver products customers will love and a strong, growing business.

Lenovo has proven track record of buying successful brands and converting them into success business as it did with IBM's Thinkpad brand.

"I am confident we will be successful with this process, and that our companies will not only maintain our current momentum in the market, but also build a strong foundation for the future," Yang said.

Google