Apple, the biggest loser in the Google-Motorola-Lenovo deal

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Lenovo executives show off several of the company’s new smartphones during an event in June in India.
(Credit: Getty Images)

Things are about to get tougher for Apple.

Google late Wednesday made an unexpected announcement that it’s selling Motorola Mobility to Chinese PC giant Lenovo for $2.91 billion, or less than a quarter of what it paid for the handset vendor just a couple of years ago. During the years Google owned it, Motorola lost money and market share, and the relationship caused tension between Google and the other Android vendors, particularly Samsung. It also led those other phone makers to develop their own software and services, rather than push those from Google. That amplified Android’s fragmentation in the market.

Overall, Google’s purchase of Motorola turned out much better for iPhone maker Apple than for Google. That’s now going to change.

Google, sans Motorola, can go back to focusing on what it does best — making a really great operating system and apps. It canmend its relationship with Android leader Samsung and the other vendors. And it canconcentrate on unifying and streamlining theAndroid experience, rather than worry about bolstering its own hardware operations. All of those factors mean that Apple may not be able to win over customers as easily as it has in the past.

“Getting rid of Motorola helps Google, and anything that Google can do to create a more cohesive user experience across vendors is competitive to Apple,” Current Analysis analyst Avi Greengart said.

But Google isn’t all Apple should be worried about. Up to this point, only Samsung has posed a real threat to Apple in smartphones. A combined Lenovo and Motorola, however, has the potential to take a large chunk of the market. It won’t be easy or quick, but Lenovo has a strong track record for dominating markets it enters. Less than a decade after buying IBM’s PC operations, Lenovo became the world’s biggest PC maker.

Already, Lenovo is one of the fastest-growing smartphone makers in China, a market that’s also getting a lot of attention from Apple. Last year, Lenovo was the second largest smartphone vendor in mainland China by volume, up from eighth place in 2011, according to Strategy Analytics. That boosted its position in the global market in 2013 to fifth place behind Samsung, Apple, Huawei, and LG.

At the same time Lenovo’s market share has risen in China, Apple’s has fallen. In 2011, Apple was the third largest smartphone vendor in the country. By last year, it had dropped to sixth place, according to Strategy Analytics.

“Apple’s lack of presence in the lower end of the smartphone market has cost it sizable volumes in China in recent years,” said Neil Mawston, executive director of Strategy Analytics.

Apple, predictably, has offered no public reaction to the Lenovo-Motorola news. We’ve contacted the company for comment and will update the report when we have more information.

via cnet.com

Shara Tibken

 

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