In 2012, Google acquired Motorola Mobility for $12.5 billion, the largest acquisition in Google's history at the time. The stated rationale was Motorola's patent portfolio — 17,000 patents that could defend Android against lawsuits from Apple and Microsoft. But Google also inherited Motorola's struggling phone business.
Under Google's ownership, Motorola continued to lose money. The phone business was not a strategic fit for a software and advertising company, and Google lacked the hardware expertise and distribution to turn it around. In January 2014, Google sold Motorola Mobility to Lenovo for $2.9 billion — a loss of $9.6 billion in under two years.
Google kept most of Motorola's patents, which was the original goal. But the $9.6 billion loss made the deal one of the most expensive patent purchases in history. The case illustrated the danger of acquiring a business for one asset (patents) and inheriting an entire operation (phone manufacturing) that you cannot run.
Google kept the patents and sold the hardware to Lenovo for $2.9B, taking a $9.6B loss — the cost of acquiring a factory for its patents.
Google paid $12.5B primarily for patents but inherited a money-losing phone business it could not run.
Google lacked the hardware expertise, distribution and retail relationships to compete in phone manufacturing.
Motorola continued to lose money under Google's ownership, with no path to profitability.
The $2.9B sale to Lenovo represented a $9.6B loss, making it one of the most expensive patent purchases ever.
When you acquire a company for one asset, you inherit the entire operation. Google wanted patents and got a phone factory. The $9.6B loss was the cost of not separating them.
Lenovo used Motorola's brand and distribution to build a successful phone business in the Americas. Google later developed its own Pixel phones in-house, applying the hardware lessons it had learned. The Motorola patents served their defensive purpose.
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