Lenovo Begins Merging Mobile Business Group Into Motorola Mobility

Lenovo has started the process of integrating its Mobile Business Group (MBG) into Motorola Mobility, in line with earlier statements on the subject.

"Effective immediately, Rick Osterloh, formerly president, Motorola, will be the leader of the combined global smartphone business unit, which will be under Motorola legal entities," a Lenovo representative told NDTV Gadgets via an emailed statement on Wednesday.

"MBG will continue to drive Lenovo's overall mobile business, but will now rely on Motorola to design, develop and manufacture smartphone products," the statement added.

Lenovo Mobile will go through a restructuring which will affect the product line as well as its brand, Lenovo Mobile Group President Chen Xudong was earlier reported as saying.

As part of the restructure, Lenovo Mobile employees will join Motorola staff. Motorola, having higher headcount, will lead Lenovo Mobile team, report added. Lenovo Mobile's workshop will also be incorporated into Motorola Mobility. Once the merger is complete, Lenovo's ZUK will become the company's "flagship Internet brand" while Motorola will continue to sell high-end devices in international markets, where it has far more presence than Lenovo.

The reported statement is in line with official announcement made by the company for its latest quarterly results earlier this month. The company had then announced a restructuring of its Mobile Business Group (MBG), and said "it will continue to drive the overall mobile business, but will now rely on Motorola to design, develop and manufacture smartphone products."

Lenovo acquired Motorola from Google in 2014 for a whopping sum of $2.91 billion (roughly Rs. 1,925 crores). As part of the buyout, Google continued to maintain ownership of a majority of Motorola Mobility patent portfolio. Motorola, on the hand, got to retail over 2,000 patents, and a number of cross-license agreements.

Ever since the buyout, it was unclear how exactly Lenovo was planning to handle both the companies. It is not strange to see companies merging its divisions. The merger usually helps a company significantly reduce the time it takes in managerial processes.

Here is the statement issued by a Lenovo representative to NDTV Gadgets in full:

With tough markets and results that missed expectations, Lenovo is taking broad, decisive actions to realign businesses, cut costs and return to sustainable, profitable growth. Specifically, Lenovo is restructuring its Mobile Business Group (MBG) to align smartphone development, production and manufacturing and better leverage the complementary strengths of Lenovo and Motorola to quickly drive growth. To create a faster, leaner business model we will leverage our global sales force across Lenovo, and will accelerate the work already well underway to maximize efficiency in our global supply chain.

Lenovo's new organization eliminates duplication, and positions us to compete as a strong player in the smartphone market. MBG will continue to drive Lenovo's overall mobile business, but will now rely on Motorola to design, develop and manufacture smartphone products. Effective immediately, Rick Osterloh, formerly president, Motorola, will be the leader of the combined global smartphone business unit, which will be under Motorola legal entities. Osterloh will continue to report to Chen Xudong, senior vice president, and president, MBG.