About a year ago, Google shocked the world by purchasing Motorola for a sum of $12.5 billion. While everyone agreed that Motorola’s 17,000 patents were not coveted by Google, most people did not know what happened to the remained of the company Motorola. This was a mystery until now.
In a filing with the Securities and Exchange Commission, Google announced that approximately 4,000 employees from Motorola will be out of jobs–out of its work force of 20,000 employees. In addition, Google will also be attempting to either consolidate or close one-third of the 90 facilities owned by Motorola. This move will cost Google $275 million in the third quarter of the year 2012.
Before being acquired by Google, Motorola Mobility was split by Motorola Solutions which may have been a smart move; however Motorola Mobility has lost money in 14 quarters out of the last 16 quarters. Motorola Mobility began losing money before the acquisition was announced to the world in 2011.
In the Security and Exchange Commission filing, Google stated that it will be shifting the emphasis of Motorola’s mobiles from feature phones to profitable and innovative devices. According to a report from the New York Times stated that Google also plans to streamline Motorola’s supply chain by cutting off approximately 50% of Motorola’s smart phone components. Processors, sensors and various other components that are used in Motorola will be affected by this change. In addition, to the 40% of the employee layoffs, Google has decided to fire 40% of Motorola’s vice presidents. The available spots will be filled by executives of Google’s choosing.
According to this report, the product team that works at Motorola will be run as a start up, leaner and more efficient unit. Emphasis will be put on innovation and the product team will be led by Regina Dugan, formerly from DARPA, the technology research wing of the Pentagon responsible for creating the Internet.
While Motorola did achieve some success in the past with several of its smart phone devices like the Atrix smartphone, this company was not considered to be a leader in the smart phone industry. In fact, it was so far behind that manufacturers did not even consider this company in the top 5 smartphones shipped out in the year 2012.
Like Motorola, HTC has struggled in the past however, HTC now ranks 4th in the industry just behind Nokia along with ZTE the Chinese manufacturer. When featured phones are added to this equation, sadly Motorola still doesn’t rank in the top 5 since it is preceded by Samsung, Apple, LG and ZTE.
While Google has purchased Motorola, it appears to be remaking the company rather than burying it, since Google is taking Motorola out of the feature phone business which was responsible for Motorola’s under-performing problems. In most likely hood, Motorola will now be a competitor for Iphone and the Samsung Galaxy series since Motorola may now be creating a new line of high end smart phones.
Jack Gold, who is an industry analyst with J. Gold Associates, believes that Motorola is not yet out of the race but he does expect Motorola release a fewer number of phone models along with a heavy concentration on high end smartphone models.
HTC has also made a similar decision and has decided to cut down on the variety of devices built. Instead HTC plans to concentrate on creating a supreme series that has multiple screen sizes and price points.
Since Apple and Samsung take home the chunk of profit of smartphones, Google’s financial and technological advancement may not be enough to make Motorola a leader. However, since it’s too early to decide the outcome of Google’s new asset, we can only hope for the very best.
Although Motorola did create some good products like the Atrix smartphone that won the Best of Show at Consumer Electronics in the year 2011 since this device could be plugged into a notebook like dock, this company was far behind in the smart phone race.
Google acquired Motorola for $12.5 billion and let go employees, vice presidents and even consolidated various facilities of Motorola in an attempt to make their purchased asset a success. At this point of time Apple and Samsung are the leaders in the smartphone industry and HTC, Motorola, Nokia along with other companies are lagging far behind.