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Will Lenovo's new acquisition help it take on Xiaomi?

Posted: 31 Oct 2014 ?? ?Print Version ?Bookmark and Share

Keywords:low-cost? mobile devices? Motorola? Lenovo? acquisition?

It's official: Motorola is now a wholly-owned subsidiary of Lenovo. The Chinese tech giant announced that it has completed the ?17.6 crore acquisition of the Motorola Mobility smartphone business from Google.

The deal had been on the cards for quite some time, but many didn't expect to see it finalised before this year ends. (Read our story: Lessons from Lenovo's Motorola acquisition) Under the agreement, Motorola Mobility, including the Motorola brand and its portfolio of smartphones like the Moto X and Moto G and the DROIDTM Ultra series, will now join the Lenovo family. In addition to current products, Lenovo will also take ownership of the future Motorola Mobility product roadmap.

Despite these changes, no Motorola or Lenovo brands will be discontinued. According to Computer World, the Chinese company will target emerging markets, while Chicago-based Motorola will aim for mature markets. Both Motorola and Lenovo products are available in some countries like India, and there are no plans to change that.

The deal will double the number of countries where Motorola's products are offered, and will even give the U.S. company a way to advance to the huge Chinese mobile device market, Motorola President Rick Osterloh told Re/Code.

But can it help Lenovo's plans to complete with Xiaomi?

Recently, Lenovo announced that it will establish a new subsidiarynot Motorolathat will focus exclusively on creating smart devices, which it will sell via its online store. And here is where Motorola comes in.

First, Lenovo can draw on Motorola's experience in producing low-cost, but high-quality smartphones. Second, Motorola brings its patentsa very valuable assetto the table. Google will maintain ownership of the vast majority of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures, but Lenovo will receive a licence to the patents and other intellectual property. Additionally Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio.

Xiaomi now ranks third largest smartphone vendor in the world, even without setting foot in the United States or Europe. (Read: Lucky 3: Xiaomi now world's third largest mobile vendor)

Seeing that Lenovo's new, hipper company will only start operating early next year, there's still some time left before we will know what products it will bring to the market and how the Motorola acquisition will come into play. Still, having Motorola on its side may give Lenovo an edge in the intensely competitive low-cost smartphone market.

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