Partners: Lenovo's $2.91 Billion Acquisition Of Motorola Mobility Is A Game Changer

Solution providers Tuesday hailed Lenovo's $2.91 billion agreement to acquire Motorola Mobility's smartphone business from Google as a blockbuster deal that will forever reshape the enterprise IT landscape.

"This is a big game changer for corporate customers who can now standardize on Lenovo from smartphones to PCs to servers," said Ira Grossman, CTO of end-user and mobile computing at national solution provider MCPc, whose Anyplace Workspace is centered on providing anyplace, anytime, anywhere computing to corporations. "Lenovo is moving full throttle into the smartphone market. Lenovo wants to own the end point whether it's smartphones, tablets, laptops, desktops and probably wearables too. Lenovo has it all now. They are building a compelling story with a multi-operating system, diverse form-factor strategy"

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Grossman said he expects Lenovo to gain traction in the corporate market with a ThinkPad smartphone. "The ThinkPad brand in corporate America is very strong," he said. "Lenovo has a terrific reputation. I think the opportunity to buy a ThinkPad phone is really exciting."

The blockbuster deal comes only one week after Lenovo agreed to acquire IBM's x86 server business for $2.3 billion. The China-based computing giant followed up that deal by reorganizing into four distinct groups: enterprise servers, mobile, ThinkPad branded PCs and cloud services.

Majdi "Mike" Daher, co-founder and CEO of Denali Advanced Integration of Redmond, Wash., No. 114 on the SP500, whose company is closely aligned with mobile powerhouse Samsung, said the deal gives him reason to take another look at Lenovo.

"It's a bold move helping Lenovo enter the smartphone market, but [it] also helps the company move away from the PC," said Daher. "Lenovo gets it. This purchase allows them to deliver an end-to-end strategy that starts with the smartphone, PC, and to the data center with the acquisition of IBM's server business. A month ago Lenovo was just a PC company. The last thing I needed for my business was another PC company. Lenovo is now on my radar."

Daher said Lenovo has a lot of heavy lifting to do on the front end and the back end with its recent acquisitions. "The Lenovo partner community is built on PCs and laptop. If Lenovo is going to succeed, they are going to have to move outside of their comfort zone and reach out to the partner community that knows how to sell into the data center and can integrate mobility into a complete solution," he said.

NEXT: Lenovo Must Up Its Game To Succeed In Smartphones

Lenovo is going to have to "seriously up its game" to succeed in the smartphone market, said Daher. "I've seen plenty of companies spend a lot of money only to fail," he said. "HP and Dell tried to crack into the mobile market and fell flat on their faces. Lenovo has a leg up on HP and Dell because it not only buys Motorola from Google but also that Google relationship. Lenovo just put a huge target on its back. Samsung, Apple, Dell and HP are going to do whatever they can to compete with Lenovo now."

Robby Hill, president and CEO of HillSouth, a Florence, S.C.-based solution provider and Lenovo partner, said the deal makes Lenovo a powerhouse on par with top-tier end-to-end computing giants like Hewlett-Packard. "They are now playing on the levels of the HPs and the Dells because they have rounded out their line card," said Hill. "That's really important because your business customers like to see well-rounded companies that aren't dependent on one sector of the industry for other revenues and innovation."

Lenovo's muscle behind an already strong Motorola Mobility product line "should open up some synergistic possibilities [for the channel] where we could really blend together innovative features with the hardware and the software," said Hill.

The Lenovo purchase price includes $1.41 billion paid at the close of the deal, comprised of $660 million in cash and $750 million in Lenovo ordinary shares. The remaining $1.5 billion will be paid in the form of a three-year promissory note.

Google, which bought Motorola Mobility for a whopping $12.5 billion in May 2012, 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 its ongoing relationship with Google, Lenovo will receive a license to this rich portfolio of patents and other intellectual property. Additionally Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio

NEXT: Lenovo Ready To Take On HP And Dell

Jack Gold, the principal analyst at J. Gold Associates, Northborough, Mass, said in an email that the deal puts Lenovo in line to take on HP and Dell as an end-to-end IT vendor. "At $3 billion it's a relative bargain," he said. "Lenovo is amassing its acquisitions to be a full line player; it has HP and to a lesser extent Dell directly in its sights. IBM could be next. I don't think Lenovo is done yet with acquiring markets and market share companies."

George Brown, president of Brown Enterprise Solutions in Dublin, Ohio, a Lenovo business partner, also characterized the deal as a "steal" for Lenovo, which instantly becomes a force to be reckoned with in the smartphone market. "Lenovo had said they planned to enter the smartphone market here for some time, and this speeds up that plan considerably," he said.

Lenovo partners already carrying the company's PC, laptops and entry-level servers said the deal paves the way for them to enter the smartphone market working hand in hand with Lenovo.

"This is going to be good for partners, as we will be able to simplify our offerings by one-sourcing more [with Lenovo]," said Douglas Grofield, CEO of Xylotek Solutions, an Ontario-based solution provider and Lenovo partner. "It is volatile in the mobile space, requiring rapid changes to take advantage of emerging opportunities. As a partner I admire Lenovo's gutsy approach!" He said Lenovo's "crazy like a fox" move gives the company a robust North American smartphone footprint.

Brad Rutten, vice president of technical services at West High Point Networks, a Fargo, N.D.-based Lenovo partner, said up until now his company has been without a wireless offering from Lenovo, selling instead Aruba and ShoreTel VoIP systems. "I see Lenovo bringing that [Motorola Mobility business into the channel], branding it and executing it properly," Rutten said. "They have been good to us so far and the product line has been good, so I don't see how they can go wrong with this move."

Yang Yuanqing, chairman and CEO of Lenovo, said in a prepared statement that the "acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones.

"We are confident that we can bring together the best of both companies to deliver products customers will love and a strong, growing business, said Yang Yuanqing. "Lenovo has a proven track record of successfully embracing and strengthening great brands -- as we did with IBM's Think brand -- and smoothly and efficiently integrating companies around-the-world. 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."

Google CEO Larry Page, for his part, said Lenovo has the "expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere."

Motorola Mobility CEO Dennis Woodside said he sees the deal as putting the mobility unit on a "rapid path to achieving our goal of reaching the next 100 million people with the mobile Internet. With the recent launches of Moto X and Moto G, we have tremendous momentum right now and Lenovo's hardware expertise and global reach will only help to accelerate this."

Additional Reporting By Kristin Bent, Rob Wright and Robert Westervelt

PUBLISHED JAN. 29, 2014