Lenovo, which intends to buy out Google’s Motorola Mobility business for $2.9 billion, is looking to become the number 3 global smartphone player and build its US presence on Motorola’s strengths. Amar Babu, India MD of Lenovo, tells dna’s Beryl Menezes that the deal will also aid in competing with Indian handset vendors in a PC+ era.
What’s the interest that Lenovo sees in Motorola?
I think the entire deal is very much in line with our overall PC+ strategy and we have been saying we would like to expand our smartphones business. Today, we have launched in many countries, but mostly in the emerging countries... we needed to go into the mature markets. We have a strong desire to be a leading player in the smartphone business as part of our overall PC+ strategy — so while right now we are number four in the world, according to IDC — with Motorola we will become number 3 in the world.
Given Motorola’s falling popularity, would Lenovo look at possible re-branding to compete with Samsung and Apple as the number 3 player globally?
It is too early to comment on future changes. But Moto X and Moto G are reasonably successful and strong brands, especially in mature markets now — though we may not see them much in India. Besides, Motorola also comes with a very strong relationship with telecom players, especially in the US, Latin America, Middle East — which would take us a long time to develop alone. They also come in with 2,000 patents to be added to the portfolio, and have a very strong R&D design team. So, while we are primarily in emerging markets, Motorola is primarily in mature markets. So, this partnership is almost like a complimentary presence in terms of geography. I think these are all clear value additions to Lenovo as an organisation.
So, will Motorola’s employees be added to Lenovo or will there be some layoffs? Also, will this be an only US-centred relationship?
There are 3,500 employees that are part of Motorola that would move to Lenovo and about 80% of that – about 2,800 employees are based in the US alone. Two-thirds of this team are engineering and technical experts; so obviously they will give us a very strong technical expertise.
Yes, while the immediate benefit will accrue to the US, as we start combining and developing our joint technology capabilities, I think this will have benefits for us across the world and we will be able to complement our operations. Since we are a strong player in the Android ecosystem, this deal further cements our relationship with Google as well.
What would be the benefit to India business as part of this deal – for Lenovo and Motorola? Better advantage over Indian handset vendors?
While right now Motorola does not have much of a business in India, they were planning to launch some products in India. They have announced no changes in their plans till the deal is confirmed by US and Chinese authorities. We have grown our business in the Indian smartphone market – more or less in line with our expansion plans. So today we are already the 4th largest player in the world -2nd largest in China, and this allows us to compete in most emerging markets with local players and we are a full-range player – competing even at the entry level. So this win will add to our strength.
Going forward do you still see your smartphone sales overtaking your PC sales?
While clearly there is an opportunity to grow in all the business areas, including the PC business, there is obviously a much faster growth opportunity available in the smartphone and tablet business and that’s where we’ve seen great growth.