Lenovo’s Motorola Brand Integration May Not Be Going As Smoothly As Hoped
Lenovo officially completed its acquisition of Motorola back in October of 2014 for a sum of $2.91 billion, but fast forwarding to more than a year later, it appears that the move is not paying off as nicely as initially planned by the Chinese mobile giant. Just this week, Lenovo published its earnings report for the first quarter of 2016, and it registered sales of nearly 5 million units of smartphone devices from the Motorola division, while posting $1 billion in revenues.
Sure, the contributions of the Motorola segment to Lenovo’s total earnings may not look so bad, especially when you take into account that the Chinese phone maker managed to sell a total of 10.9 million units of its smartphone devices in the first three months of the year, while reporting a total revenue of $1.7 billion for its Mobile Business Group. But bear in mind that during the first quarter of last year, the Motorola division kicked in sales of 7.8 million units of smartphones, while bringing in $1.8 billion in earnings to the Mobile Business Group.
Of course, mobile is just a part of Lenovo’s entire business. Apart from smartphone devices, the company also manufactures computers, and is one of the most successful at it around the world. But finding similar levels of success in the global smartphone market has proven to be a lot trickier. It does not help that smartphone ownership is approaching full saturation levels, especially in major mobile markets across the globe. And while it is true that industry leaders Samsung and Apple continue to dominate, other players often have to content themselves with whatever scraps are left lying around.
As for Motorola, the strength of its brand is also lessening, even in its homeland the United States. If it had done well in getting American buyers to purchase Moto handsets, it might have helped prop up Lenovo’s numbers. And it appears that Lenovo might need all the help it can get. Even in its native China, it has its total volume of smartphone shipments fall by 85 percent during the first quarter of this year.
Lenovo now vows to focus its attention on bringing back its mojo in the Chinese market. To achieve this, it plans to move from its dependence on wireless carriers pushing its devices to selling its products itself on the market, and basically letting Chinese mobile users choose whichever mobile operator they prefer for their newly bought Lenovo smartphones.