Lenovo and Motorola: the beautiful story that turns into tragedy

how Motorola has ended up in the hands of the Chinese?

Motorola was an American company that was created by the late 1920s. She specialized in telecommunications technology and electronics, which helped him moments of glory in different sectors and at different times. In 2011, Google bought it for $ 12.5 billion, mainly to acquire patents. Lenovo, on the other hand, is a more recent Chinese company (created in the 1980s), appeared on the international scene in 2005 when its acquisition of the IBM personal computer industry. In short, two brands are very famous in the 2000s.

Opinion by Benoit Pepicq

Lenovo bought Motorola to improve its image abroad

what do you think?

Like any business, Lenovo wants to maximize its revenue and is looking for opportunities to get there. The Chinese Government seeks to motivate the country to invest in international companies. It is in this context that Lenovo decided to acquire Motorola for $ 2.91 billion dollars (1 956 485 970 euros). The sum is pharaonic, but Lenovo sees a worthy of such an investment depreciation. In addition, the image of the Chinese system is unflattering at the time (she is in somewhat improved since) in the eyes of the Western consumer, Lenovo probably thought that having a name / an American brand could reassure the consumer and optimize sales.

In addition, the situation is somewhat confused. Lenovo announced the Lenovo brand should be associated with motorcycle devices, and that several countries all phones brand depend on motorcycle, but strangely it is not possible to buy Smartphone motorcycle since the Lenovo shop , we find not even a redirect to the bike site.

That show us the numbers?

Lenovo bought Motorola year-end 2014. The Wall Street Journal presented a chart showing the place of two manufacturers in the world ranking of the smartphones that provide more smartphones to the surfaces of marketing. In the last quarter of 2014, Lenovo was in 6 position (while he was in 4th position previous quarters). After the merger, there is so more than a company (Lenovo, if you have not followed) which was in early 2015 in third position. 3rd world, it’s pretty good. The concern is he got off in the following quarters. The first two semesters of 2016 represented a descent to the underworld for the manufacturer since he lost three places in the standings, ending up 8th a year after having been first.

lenovo stats2
here is the evolution of Lenovo before and after the merger with Motorola. In The Wall Street Journal

the chart published by the American newspaper also shows us the number of devices distributed to areas of marketing. Together, Lenovo and Motorola could provide nearly 25 million devices by the end of the year 2014. Once the merger is completed, they have managed to get 20 million little at the end of the year 2015. The year 2016, she is a real downward spiral since the beginning of the year was very close to the 10 million mark and the third half of the 15 million was still not reached.

In other words, the merger showed a disappointing result: apart from the first half of Lenovo has failed to maintain its place in the top 3 of the manufacturers. The number of shipments of smartphones, it declined considerably.

That’s happened?

Lenovo wanted to overtake Samsung and Apple on the highway to success, and customize my car with Motorola seemed to be the most appropriate solution. For the moment, this is not very convincing. Chinese giant told “learn a lot”, but perhaps he can learn faster? The former boss of Motorola, Rick Osterloh, decided to try my luck elsewhere on its competitor Google.

AndroidPIT China
most of the manufacturers of smartphones are Chinese. © ANDROIDPIT

the major problem is obvious: the competition is strong regardless of the market. The ubiquity of Chinese smartphones makes things difficult, particularly Huawei that is taking much to evolve. In one of its reports published a few months ago, Lenovo had indicated problems in China as well as in the United States. With its low prices, motorcycle faces in Europe of competitors such as Honor. On the high end, it will be difficult to dethrone Samsung and Apple that are unparalleled popularity. In short, difficult to find its place.

The modular aspect is certainly interesting and practical, but it does not seem to attract the masses. Manufacturer LG had bet big on the modules and recently announced to turn around because the result is not to go. As a user, it is rather difficult to accept to buy a smartphone unfinished, who needs another investment in a MotoMod in order to truly be as he wishes. 

Lenovo’s CEO stated the following sentence: “We underestimated the differences of the culture and the business model”. In french: “we underestimated the differences of culture and models of operating companies”. This shows once again the importance for a company to adapt to its market / customers rather than follow blindly a local/national model that has been proven in the country of origin. The quest of the international is not an easy task.

According to you, what hurt Lenovo did?

Lenovo bought Motorola to improve its image abroad

what do you think?

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