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« Apple Results Q4 - Wow this was far worse than I thought... | Main | Microsoft Announces New CEO: Not Elop »

January 30, 2014



Intresting that Motorolla went for so low as 2,9BN that says something that Google wanted to get rid of it so bad and also the fact that they just wanted 600million upfront and rest they pay later.


The UI of that Tizen device sure looks like the Windows Phone UI.

Michael Scharf

Although I agree with you that Google was always planning on selling Motorola, I don't agree with your description of Google as a software and services company. There really are two Googles and that's why some people were confused about the long-term potential of Google purchasing Moto.

Google the Ad company - This is their core business and drives just about everything, search, gMail, apps, and Android. The product is the public and the currency is data. The more data they collect, the better the ad placement the larger the revenue.

Google the laboratory - This is where all the headline making stuff gets done. Autonomous cars, genetic analysis, robots, contact lenses with biometric sensors, etc.

The question was which Google purchases Motorola, and now we know for sure. This is very similar to the purchase of NEST, the home automation company. Is NEST is a platform for gathering data, or is the company a long term experiment that will drive the company after the ad market becomes less of a money maker.

John Fischer

Tomi, can you elaborate the same way you did about apple disastrous results about samsumg 18% drop ? Has it peaked or the marketshare / war price is doing its part, meaning samsung will continue to grow in marketshare but its profits will continue to decline.

What are your predictions ?


Google's loss on Motorola is more complicated than a simple $12 billion - $2.9 billion = $9 billion loss.


@John Fischer:

According to IDC, Samsung's smartphone market share dropped from 31.3% in 2012 to 30.3% in 2013. Sales rose from 219.7 Million smartphones in 2012 to 313.9 Millions in 2013, though.

The Q4 market share dropped from 29.1% in 2012 to 28.8% in 2013 (smartphones sales Q4 2012 66.7 Million, 2013 80 Million.

So I don't know where the 18% drop should be - for me it seems Samsung roughly grew with the market, which is way better than what Apple did.


So Vatar

Looking at Microsoft I think there is a chance that they will back away from purchasing Nokia's handset business in spite of the contract and the big penalties they'd have to pay.

Why? The decision about the next MS CEO is dragged out and certain high profile CEO contenders backed out. I think the delay in naming the new CEO is an board-internal struggle about MS' future strategy. A group around Ballmer thinks that they need to stay in the mobile business distributing WP, and in order to do that they need the only entity selling WP handsets in relevant numbers: Nokia handset.

I think there is another group that sees any investment into WP as lost anyway, Android and Apple won the day. They see Windows and Office as cash cows to be milked as long as it can be. But Microsoft's real future is somewhere else: Business software, and cloud based business services.

If so, why then invest now over $7B in purchasing a failing handset business and throwing more good money after bad? Why not just eat the penalties and let the new CEO start with a clean slate?

I hope we will see soon which direction Microsoft chooses. The name of the new CEO will give a good indication.

What would it mean for Nokia if they cannot unload their handset business to MS? I fear this will bring the whole company down. In the handset business they do not have market share left, the business is losing lots of money, and if MS backs out their WP portfolio would be osborned (again!). Also after years of mis-management and not offering what customers want, I fear their brand is damaged beyond repair. Nokia bankruptcy?

Not a rosy scenario for Nokia at all.


@So Vatar
There are strong rumors that Nokia will release an Android phone very soon.

So Vatar

I read that too. I can see this only as proactive move in case the MS purchase goes sour. I cannot see why this would be in Microsoft's interest.

In my opinion it would be too little too late for Nokia. Times have changed, they are not the king of the hill anymore. Any economics of scale got lost over the last few years. Maybe they can compete in the Motorola league, meaning they cannot compete at all. Samsung is totally out of reach, Lenovo turns itself into a formidable challenger in the Android group, they play to their strengths in a pretty strategic and methodical way. The other Chinese and Korean competitors seem much stronger than Nokia. What is left that is good about Nokia's handset business? Yes, a few years ago they had resources, cash, brand recognition, innovation. They botched it. Nowadays the board is essentially still comprised of the same figures that drove Nokia down. And Flop is still flipping papers somewhere inside Nokia and collecting pay checks.

My trusty N9 gets old on the tooth too. I just bought a Nexus 5 for my son and a Nexus 7 tablet for myself. I am still no Android fan, but my next phone will be an Android. And it won't be Nokia, sorry to say.

So Vatar

MS is said to name Satya Nadella as next CEO. He is MS' enterprise and cloud chief.

I place a bet: This is not good for Nokia's intend to get rid of the handset business!

eduardo m

Tomi, you say that Nokia shareholders would have been better of with open bidding to buy all or part of the company. I am wondering if the original contract with Microsoft included a provision that MS would have exclusive rights to purchase Nokia.


> I am wondering if the original contract with Microsoft included a provision that MS would have exclusive rights to purchase Nokia.

Considering the terms under which Elop was going to get the $$$ I would be more surprised if there wasn't such safety clause.


Nokia really needs somebody to take their handset business. They need the cash. Since before Elop, they've been violating some Indian tax law, and now it's coming back to bite them. They're going to have to pay huge penalties, and they can't do that while their bonds are junk and their handsets are losing money hand over fist.

Motorola has been losing money, but at least it has no major liabilities.

I wouldn't be surprised if Lenovo does a good job with Motorola. I wouldn't be surprised if it crashes and burns. I don't see anything to prejudice me in either direction.


@LeeBase: "Yes, it never made sense for Google to buy Motorola. They sunk $12.5 billion, then suffered hundreds of millions more in losses from the ongoing business. All for what?

- got ~3 billion $ in cash (inside Moto)
- sold some bussines for ~3 billion $ earlier
- sold Moto foctories to Foxcon (~tens of millions $)
- sold the rest to Lenove (~3 billion $)

Plus it keeps the patents that, even though FRANDed, in fact prevented Android from promised 'thermonuclear (patent) war'.

"For patents that were FRAND encumbered? Google has not won a single battle using Motorola patents." - but did not loose any either. And that was they needed, cost did not matter...

John Fischer

@ Huber

Oh, sorry, i forgot to write 18% profit drop, its was all over the news.

I was refering to that, a fatal combination when market share does not grow to compensate that.

IBM sold the PC division to lenovo when margins were so thing that there was no sense in keeping it juts to have market share.

If margins peaked for Samsumg and the handset unit only generates returns based on units sold then there is a dangerous trend starting to happen.

Tomi, any insights ?

This was reported a xouple of weeks ago, no one cares so much ?


"So Lenovo now will have about 6% market share and becomes rather clearly number 3 in the smartphone race."

Clearly #3? Really?

That is far from clear. I think there is a fair chance that Lenovo, chokes on swallowing Moto and IBM Intel server lines at the same time, and starts posting losses. By the time this transaction closes - should be late this year at the earliest, the market would have changed substantially.

So I'd say the best we can say right now, is that Lenovo will still be stuck in the middle tier.

The biggest loser, continues to be Google, who, with its Android mis-adventure, had to spend a net $7.5B to hold on to a subset of the Moto patents. As an investor, I'd much rather have that money in my pocket. I'm still giving Google the benefit of the doubt, but at some point, the Google boys need to tell us what they generated with that $7.5B (plus another $7.5B invested in Android directly). Else, they should be run out of town. Lets get Carl Icahn to get a proxy fight going there.


@Leebase - don't ask me how I know - but, Google did not put ANY money into Moto. Moto truly operated as an independent, wholly owned subsidiary. They were give a chance with Moto X , Moto G, etc to prove themselves. They failed. Simple as that.

In the end they spent $7.5-$8.5B for a subset of the Moto patents. If you ask me, they overpaid by a factor of 4 or more.

And there was never any loud cries from Samsung on the purchase. Google, if anything, went out of its way not to give Moto any Android competitive advantage vis-a-vis Samsung. And Samsung knows that.


I can't really see how Lenovo is going to become number three, not even close. In Europe Lenovo sells almost nothing compared to the other established brands. I can't say how they are doing in Asia but there is fierce competition from other Asian brands there. Lenovo hasn't really any obvious advantage compared to other brands like premium or cost effective ones and I don't think owning Motorola is going to change anything for them.

Henrik Nergård

I guess in the long term Lenovo can be in the top three manufactors with the Motorola deal.

But I am not so sure the deal is bad for Nokia/Microsoft, I dont think it matter so much.
I am more optimistic for them.

My reasons:

1. The app market have increased for Windows Phone 8. Over 200.000 for some time ago and still growing fast.
The popular apps who was missing are in place now, like Instagram etc..For the average user the apps are most important.
Not if the handset itself are Android, iOS or Windows Phone.

2. All current WP8 devices will get Windows Phone 8.1, so the problem when they went to Windows Phone 7 to Windows Phone 8 will not happend this time.
Windows Phone 8.1 is not far away. Probably some time in april 2014.

2. Marketshare for Windows Phone 8 (acording to Kantar Worldpanel) have surpass 10% for UK, Germany, France, Italy and so on.

In short its enough for Microsoft to compete in the smartphone market.


There's no doubt Google selling Moto and sharing their patents with Samsung is a clear case of them sucking up to try and keep Samsung onside but I think anyone that believes that means Tizen is dead is barking up the wrong tree. Samsung want control of their complete 'ecosystem' and they'll never have that with Android, this is just currently convenient for Samsung because Tizen + S-Cloud are not yet ready for prime time.

Don't forget Samsung don't just make smartphones they also make TVs, cameras, fridges, freezers, washing machines, ovens, microwaves, ... and they want their huge breadth of products to network with each other. Tizen is also headed for quality cars like Jaguar, Land Rover and Toyota. Samsung's 'ecosystem' will be much more than email, maps and an app store full of gazillion data harvesting cr4pware apps.

This blog might just be about smartphones but that isn't the limit of Samsung's universe.

Irrespective of Lenovo's purchase of Moto I still expect Huawei will be a clear number three in 2014. The Ascend Y300 is by far the best budget device currently on the market and devices like the P6 demonstrate they have ambitions at the high end too. Anybody that's had a Huawei device knows, despite the affordable price tag, they don't feel cheap in the hand. These are very nice devices.

This is another reason for Samsung to create their own universe, if they stay with Android + Google in the not to distant future they're going to be in a head to head price war with Huawei because there isn't a quality differential.

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