Lenovo Takes the Anti-Microsoft Approach to Its New Smartphone Company
Lenovo now officially owns Motorola -- and it's officially keeping the brand intact.
Early this morning, the Chinese manufacturer closed its $2.9 billion acquisition of the Motorola Mobility handset line from Google. With Motorola, Lenovo becomes the third largest smartphone vendor worldwide, behind Samsung and Apple. "[We] will give the market something it has needed," Yang Yuanqing, Lenovo chairman and CEO said in a statement.
Later, on a press call, Mr. Yang outlined his branding approach. "We will use Motorola only in mature markets," he said. "In emerging markets, we will use a dual brand strategy."
It's a divergent tactic from the one Microsoft has taken. After finalizing its own purchase of a once-iconic, now-deflating smartphone brand, Nokia, Microsoft quietly prepared to shutter the name. This month the company announced its plans to replace all its consumer products, including Nokia smartphones, with Microsoft branding. In several developing markets, Nokia still retains sizable share of the handset market and formidable brand equity.
Lenovo, the world's largest PC-maker, which is based in Beijing and Morrisville, NC, has a solid reason for its decision. Its brand name, while growing, remains foreign to most U.S. consumers. Still, Motorola, which once commanded a quarter of the handset market, now has less than a 6% share of the U.S. market, according to comScore.
Rick Osterloh, Motorola's president and COO, will keep his position in Chicago. Adrienne Hayes, Motorola's CMO since April, will also retain her role, a Motorola spokesman said.
Motorola recently launched a new campaign, "Choose Choice," with Droga5. Lenovo works with DigitasLBI, Blast Radius, Geometry Global and DLKW Lowe. Kristy Fair, a Lenovo spokeswoman, said there are no changes to the agency relationships.
IDC's third quarter global smartphone estimates place Lenovo, without Motorola, fourth with 5% market share. The research firm also pegged Lenovo, which recently launched its latest tablets, as fourth in the global tablet market, its share rising 31% from 2013.
Asked on the call if the acquisition means the Motorola brand will re-enter the tablet market, Mr. Osterloh dodged the question. "We're very excited about the possibility of working on future tablets together," he said.