Jeff Kagan: Will Lenovo Grow with Motorola Smartphones?

Jeff Kagan |

Moto_X__2nd_generation__cover_photo.JPGLenovo Group Limited (LNVGY)  is one of the computer makers that seems to be bucking the trend.
In recent years they continue to grow while others struggle. Lenovo recently acquired Motorola Mobility from Google, Inc. (GOOG) . Smartphone growth suddenly seems to be a point of interest for Lenovo. So will Motorola be a home run for Lenovo?

It’s still too early to pronounce Lenovo a big winner in smartphones, but so far things are looking pretty good.

A few questions at this early stage:

  1. Why did Motorola do so poorly on it’s own?
  2. Why did Motorola still do so poorly under Google?
  3. Why will things be different and better under Lenovo?
  4. Do Lenovo and Motorola understand the differences and the importance in Smartphone marketing?

These are interesting questions. Let’s take a closer look.

Lenovo is a strong leader in the computing business. Ignoring their big recent goof with privacy and security on many of their computers, they have been doing strong business and showing growth, while other PC makers are struggling.

If they keep their noses clean going forward, I think they will be able to manage this brand value catastrophe that could wipe a company off the map.

Lenovo was a smaller player, but then they acquired the Thinkpad business years ago from International Business Machines Corp. (IBM) . They have been growing ever since, even as growth has slowed in the computer industry with smartphones and tablet computers.

To increase growth, Lenovo sees value in offering smartphones and tablets as an addition to their bundle. This makes sense, but very few companies have been successful at this. Lenovo has been selling these devices for a while with a moderate level of success.

Now Lenovo has made an interesting acquisition. They have Motorola under their hood and have every intention of revving their engine to success. While it’s too early to offer a prediction, so far, at least they do seem to be on target.

Motorola is a good company with good people and good technology. They were one of the leaders in the wireless revolution. They just lost their way in the 1990’s when the networks changed from analog to digital. At that point, they gave up their number one position to Nokia Corporation ($ADR), which today is owned by Microsoft Corporation (MSFT) .

Today both Nokia and BlackBerry Ltd. (BBRY) have given up their number one and two positions to Apple, Inc. (AAPL) , Google and Samsung Electronics Co. Ltd. ($KRX), but that’s an entirely different story.

Motorola's Uphill Climb

Motorola has struggled to remain relevant as the mobile and wireless world marched on. They could not strike gold on their own, so they were spun off and acquired by Google. Google could not resuscitate the company either so they sold it to Lenovo.

Now we are asked to believe that Lenovo will put their magic pads on the quiet chest of Motorola, yell "Clear!," and shock the brand back to life.

Will it work? That’s the million-dollar question. We won’t have an answer for a while. We have to wait and watch. We have to see what Lenovo does with the brand. We have to see the technology and the marketing in order to have any indication.

So can Motorola be shocked back to life and be a wireless leader once again? The answer is, yes it can. The next question is, will it? That answer is less clear.

Success with a fading and dying brand has happened before. As one example, let me remind you of Apple. Apple was struggling and dying in the 1990’s. They took an investment from Microsoft to stay alive. They got Steve Jobs back as CEO. They stabilized the company, but it still was not the growth monster it is today.

iPhone Changed the Game...Leaving Competitors in the Dust

What caused Apple to become a growth monster? The iPhone. Around seven years ago, the iPhone was introduced and the company exploded with growth. Nothing has been the same ever since.

So yes, success can be had even with a dying and struggling company. And yes, Motorola does have an older and tired, but still valuable brand name. So they have the same kind of chance to be successful once again under Lenovo leadership as Apple had.

The real question is what will Lenovo and Motorola do with that chance? To answer that question we will have to just wait and see. I would love to see Motorola become successful once again. Hell, I would like to see Blackberry and Nokia be successful once again as well.

We can never have too many competing and successful choices in the marketplace with strong and growing companies behind them.

There is no reason this two horse race needs to remains that way. There is no reason why roughly 80 to 90% of the wireless market is owned by Apple, Google and Samsung.

They all can be successful once again. We'll just have to wait and see what Lenovo does with Motorola. Let’s hope for the best.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
IBM International Business Machines Corp 161.59 1.24 0.77 235,070
AAPL Apple Inc. 109.44 -0.51 -0.46 1,915,063
GOOG Alphabet Inc. 760.17 1.06 0.14 94,231
BBRY BlackBerry Limited 7.53 -0.04 -0.53 105,157
MSFT Microsoft Corporation 59.96 0.01 0.02 1,052,193

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