Wednesday, January 18, 2017

Report: Lenovo Underestimated Motorola Revival Efforts at Time of Purchase

Back in 2014, Google shocked the Android enthusiast community briefly when it decided to sell off Motorola Mobility to Lenovo. Many had hoped that Motorola would be Google’s smartphone hardware division, becoming the prime example of how Android’s software can be used in harmony with affordable hardware.

With Lenovo coming into the picture, we realized that this dream will remain a dream.

In an extensive report published by The Wall Street Journal, Lenovo Group Ltd.’s CEO Mr. Yang Yuanqing is quoted as saying:

We underestimated the differences of the culture and the business model.

This comes in the heels of Motorola failing to return as strongly to the current existing smartphone market. The situation is in stark contrast to the vow that Mr. Yang had taken — to restore the brand as a global leader. The plan then was to propel the combined company entity to global dominance, a task that seemed more realistic and achievable back then when the two companies combined gave us the third biggest smartphone maker by shipments.

Granted, Motorola was on a gradual downfall even when Google acquired it, lagging behind Apple and Samsung in all areas. Lenovo’s acquisition did not help the situation though, for neither Motorola, nor Lenovo. Lenovo fell from the world’s number 3 smartphone makers by shipments, to number 8. They also had to axe more than 2000 jobs in the U.S.A., and had to report their first annual loss since 2009 in May 2016.

According to the report, poor integration between the brands was but one of the many mistakes. The most crucial of those mistakes involved Lenovo’s lack of clear vision for its largest markets.

Mr. Yang pushed for Motorola sales in China where Lenovo’s own phones were dominant and the market was saturated. There was strong insistence on keeping the brands separate, with Motorola targeting high-end consumers and Lenovo sticking to less-expensive devices. However, it decided not to spend heavily on marketing and adopt online-only sales model, something that had proven successful for Xiaomi in China. But with the price of the premium handsets approaching the iPhone, there was little hope that an online-only brand with little marketing would be able to compete. IDC estimates on shipments put Motorola’s Chinese shipments at 200,000 in 2015, which is nothing when compared to the 65 Million shipments by Xiaomi. Further, Lenovo ended up creating yet another phone brand in the form of ZUK, transferring several employees from its parent company’s phone division onto ZUK and leaving fewer hands on deck of the once-successful ship.

For the US, Lenovo initially raised advertising expenditure, but then slashed it down along with product development. Errors continued when Mr. Chen Xudong, a long time Lenovo PC executive who had little background in smartphones outside of China, was put in charge of the combined company’s global phone business. This meant that Motorola’s then-president Mr. Rick Osterloh would be reporting to Mr. Chen. The Wall Street Journal writes that Mr. Chen was disproportionately interested in products for China, often unilaterally adjusting product timings and features, even for products not designed for China.

In November 2016, Mr. Chen was transferred to Lenovo’s customer service division. Mr. Yang now believes that their smartphone business can see success, thanks to increased global advertising and marketing for the Motorola brand in the second half of 2016. The Moto Z is seeing strong global sales, which gives us hope that there’s still some fight left in Motorola.

To read the full report, head on over to The Wall Street Journal.

What are your thoughts on Lenovo and Motorola’s troubled corporate marriage? Will Lenovo succeed in 2017? Let us know your thoughts in the comments below!

Source: The Wall Street Journal

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