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Lenovo Boss Says That Motorola’s Return To Profitability Is On Track

April 19, 2015 - Written By David Steele

Lenovo Chief Executive Officer, Yang Yuanqing, has said that six months after the acquisition of Motorola from Google, the new business is “on track.” Yang is in Chicago this week as part of an annual tour of Lenovo’s operations around the world and has reported that the timetable to put Motorola back into profitability is still on target. He said this on the matter: “We said we want to turn around the business in four to six quarters after we close the acquisition. This is still on track. By end of the (fiscal) year, we should turn around this business.”

Lenovo have reintroduced Motorola back into the Chinese market following an absence of over two years. He reports that Chinese consumers have responded well to the reintroduction of Motorola but did not go into sales specifics. We understand that Motorola’s overall sales have been buoyed by the Motorola Moto G, one of the market’s favourite value-conscious Android smartphones. The Moto G offers a very respectable box specification, a great user experience over near-stock Android for a surprisingly inexpensive price. Of course, the Chinese market is quite different from the United Kingdom, European or United States markets and here, Motorola is being positioned as a premium brand. Yang cites that Lenovo is already one of the top players in the Chinese market and for Motorola, volume is not the priority.

There are many local Chinese manufacturers offering great value devices and Motorola forms one half of Lenovo’s overall two-pronged attack on the market. At the bottom end of the market, Lenovo-branded devices compete with the Huaweis and Xiaomis of the Chinese market whereas at the higher end, the Moto X is competitive. “Motorola is doing well—it’s on track,” Yang said. “China is a very competitive market. There are a lot of local players. We prioritize the profitability there. We don’t want to lose a lot of money there. So the volume isn’t the priority.”

So far, Lenovo have not tried to change the Motorola approach to Android devices, whereby the software is very close to stock and, broadly, this has helped the devices receive software updates in a timely fashion. We have seen a new generation Moto E complete with LTE launched earlier this year but for the newer generation Moto G and Moto X, we’re probably going to have to wait until the end of the summer. Nevertheless, Motorola’s recovery into profitability – because the business did not return a profit under Google’s stewardship – remains on track and something of a medium to longer term project for Lenovo.