Motovono

Ryan Prekop

Industry Analysis

The article “Google and Lenovo: Motonovo” discusses Google’s acquisition of Motorola Mobility and then the sale of Motorola’s handset business to Lenovo. Google wanted to enter the smartphone market and did so by acquiring Motorola. Google’s main objective was to get its hands on the firm’s vast portfolio of patents, which it needed to defend its Android OS. However, after only 19 months, Google realized how bitterly competitive that market was and the fact that keeping up sales was getting harder each day. Google lacked the in-house know-how to turn the business around and the scale to make it viable. Because of this, they sold Motorola to Lenovo. The acquisition made sense for Lenovo in that it should fuel its steady rise in the table of smartphone manufacturers and its grander quest, transform Lenovo into a global technology innovator.

One can conclude much about the smartphone industry and the Five Forces from this article. (1) Barriers to Entry seem moderate. First of all, Lenovo is obtaining the fourth strongest smartphone manufacturer in the world (according to IDC). Just by buying Motorola, Lenovo is already a major competitor in the smartphone industry. Also, Lenovo has a short product development cycle and has the ability to cut manufacturing costs through scale efficiencies. This will allow Lenovo to pass saving onto their customers. The reputation of Lenovo might be the biggest hurdle. Although they are big in the PC technology, they have no proven quality in smartphones.

The (2) Threat of Buyers seems moderate to high. The smartphone industry sells commodity products that are available through many different avenues (Amazon, EBay, mail order, Cell phone stores, BestBuy). Relatedly, there is a high treat of (3) Rivalry in this industry. With Apple and Samsung leading the way in smartphone sales, this is taking potential profit away from Lenovo. This can be correlated to threat of buyers since the buyers have the...