The acquisition of the Motorola brand by Lenovo does not mean that the brand will be a success in Australia due in part to the Lenovo brand having little presence in the consumer electronics market.
Despite having some of the best PC brands in the world Lenovo management in Australia has resisted entering the mass consumer electronics market.
Late last year the Chinese Company cut an exclusive deal with JB Hi Fi to sell their 8″ Lenovo tablet which according to JB Hi Fi management is doing well up against brands like Apple and Samsung.
Since the acquisition of Motorola by Google the Motorola smartphone brand has gone from being a high profile mobile phone to one that is struggling up against smartphones from Samsung, Apple, LG and Sony.
Under Google management the Motorola brand was stripped bone bear with the big search Company resorting to sacking most of the Australian Motorola management team.
They also spent little on advertising.
Lenovo on the other hand is not a big spender on marketing in Australia and for either the Lenovo PC brand or the Motorola brand to take off with mass consumers the Company is going to have to invest in resources spanning sales distribution, merchandising and marketing.
At the same time brands like Apple and Samsung who were tipped at CES to be contemplating getting out of the PC market are going to make it hard for Lenovo to get traction in Australia up against established smartphone and PC brands.
In the business to business market Lenovo has had a lot of success due to the fact that they produce an extremely good product. Year in and year out at CES some of the best PC products have been shown by Lenovo, yet despite having the right products the Chinese Company has resisted entering the consumer electronics market due to the risks associated with dealing with mass retailers and the low margins in CE products.
Right now Apple and Samsung Electronics dominate the smartphone business in Australia, controlling about half of the sales and most of the profits, the Motorola brand is not even in the top six.
Via their acquisition Lenovo has pushed itself into the 3 position worldwide in the smartphone market with the agreement to buy Motorola Mobility from Google,
Lenovo and Motorola would still be only a distant third to Samsung, with 29 percent, and Apple, with 17 percent, according to Counterpoint Technology Market Research.
Right now Lenovo sells 97 percent of its phones in China competing head on with Huawei.
Motorola Mobility’s Moto X phone which was not sold in Australia via carriers is struggling to get traction up against the big brands and there is a real possibility that Lenovo may choose to not launch a Lenovo or Motorola branded smartphone in Australia because of the cost of doing business Vs the cost of carving out market share. The only option is that they cut big deals with carriers and retailers and then offer them big margins to push the brand ahead of other brands.
Google piled up millions of dollars in losses from Motorola during a brief ownership that began in 2012 with the Company dropping a minimum of $10 Billion dollars on the brand.
Despite this Lenovo executives say the Motorola brand remains valuable. And analysts agree that the deal includes other assets that could give Lenovo a better chance of eventually challenging the top two than other second-tier smartphone makers.
“Lenovo now has extra scale in smartphones and a seat near the top table,” said Neil Mawston, an analyst at Strategy Analytics, a research firm.
Some analysts said the deal was reminiscent of Lenovo’s 2005 acquisition of IBM’s PC business, which turned a parochial Chinese electronics company into a global technology power. After several other acquisitions, Lenovo is the biggest PC maker in the world, and it moved this month to expand its computer-making operations further by snapping up IBM’s low-end server business.
Although the company has been pushing to expand its smartphone business internationally, more than 90 percent of its sales are still in China. Lenovo has entered a few other developing markets, but it has not begun selling phones in the United States or Western Europe.
Lenovo executives said they would retain both brand names, and in some cases, the two brands might be sold alongside each other.
