The Tech Bet

Google cuts the cord on its handset business

Christina Medici Scolaro
Tech Yeah! Lenovo makes its mobile move

In what may seem like the blink of an eye, Google sold its Motorola handset unit less than two years after it bought it.

The Internet search giant bought Motorola's handset arm for $12.5 billion in 2012. It was supposed to be a great pairing of making phones and filing them with the Android operating system, but instead Google is selling the business to Chinese electronics company Lenovo for $2.9 billion.

Some question the motive behind the sale.

"What they've been able to do is extract all of the value out of that relationship that they needed over the last couple of years and now they're letting it go," said Brian Blair, principal at Wedge Partners. "What they needed to acquire Motorola for was its patents."

A Motorola employee demonstrates Motorola's Moto X.
Don Emmert | AFP | Getty Images

(Read more: Google selling Motorola phone business to Lenovo)

"They probably learned that they need to own patents around any new technology they're developing from the get-go, so they don't have to make this large, multibillion-dollar purchase to defend what they've effectively created," said Blair.

Regarding the impact on rivals, will Apple and Samsung be better off without the Google-Motorola pairing?

"I think Apple likes the deal because it basically takes Motorola out of the high end. The company's flagship phones (Moto X and Moto G) are measurably lower end than the iPhone, so Motorola was heading in that direction anyway," said Pete Pachal, technology editor at Mashable.

Blair said the smartphone industry is saturated on the high end, but the mid- and low-end range still has room for growth, which will benefit Lenovo.

"Lenovo sold about 42 million units last year, that could grow to 65 million this year and Motorola could help take that number to 100 million in 2015," said Blair.

"I see Apple and Samsung as winners in the deal. Samsung, along with other Android OEMs, no longer have any reason to fear Google as a hardware competitor," said Pachal.

—By CNBC's Christina Medici Scolaro.