Lenovo: Motorola acquisition 'did not meet expectations'

It's rare to see much self-criticism in a company's quarterly financial report, but Lenovo hasn't been shy about it today with its disclosures around its mobile business group. "Integration efforts did not meet expectations," says the Chinese company with respect to its takeover of Motorola and subsequent efforts to consolidate it with its existing Lenovo-branded portfolio. Both crucial mobile markets, China and the United States, disappointed in the wake of Lenovo's takeover, with Chinese shipments declining by a huge 85 percent and product transition in North America deemed simply "not successful."

Lenovo says it has drawn many lessons from the experience since the close of the Motorola acquisition and it's applying them quickly. One aspect of its refreshed strategy is to have two co-presidents, with two distinct strategies for China and the rest of the world. In China, Lenovo will refocus around its affordable Zuk brand "to rebuild its end-to-end competitiveness," while elsewhere the company plans to keep growing in emerging markets "and get the US business back on track with a competitive product portfolio." This blueprint is already being followed with the latest Moto G launch, whose marketing is focused on India and Brazil, two countries where the Moto brand is already doing well.

What were the expectations that Lenovo had when it bought Motorola from Google? Nothing short of "building a strong number three and a credible challenger to the top two in smartphones," as company CEO Yang Yuanqing expressed back in October 2014. Instead, what has happened is that the combined Lenovo-Motorola group has fallen out of the top five global smartphone vendors, supplanted by fellow Chinese manufacturers Huawei, Oppo, and Vivo. Huawei has actually risen to become exactly what Lenovo intended: a credible challenger to the top two that has both the global scale and the quality of products to compete with Apple and Samsung.

Lenovo is still the world's biggest PC maker and has a solid foundation on which to build a mobile recovery. It would need to do something different to stand out, however, and early leaks of a radically different new Moto Z flagship suggest it is indeed aiming to be bold and ambitious. The Moto Z is expected to be accompanied by a series of MotoMod accessory cases, which add things like a pico projector, a zoom camera, and beefier speakers to the basic device. The Z is widely anticipated to be launched during Lenovo's tech conference on June 9th, so that will be our next best chance to get an idea of where the company is headed.