Mobile cell phone manufacturer Motorola Mobility will reduce its workforce in India as a part of its strategy to lay off 20% of its work force and close a third of its 94 offices worldwide, reports the Press Trust of India (via thehindu). Motorola’s CEO Dennis Woodside said in an interview with the New York Times that the company will shrink operations in Asia and India, and centre research and development in Chicago, Sunnyvale and Beijing.
On 15th August 2011, Google agreed to acquire Motorola Mobility for $12.5 billion for its 17,000 patent portfolio, with the stated intent of this helping Google in defending its mobile operating system Android. The European antitrust regulators and the the U.S. Department of Justice approved the deal in February 2012, after which Google completed the acquisition in May 2012 for $12.4 billion.
Google’s Plan for Motorola
Woodside said that one-third of (approximately) 4000 job cuts would be in the US, and the company would shutter operations in unprofitable markets, discontinue low-end devices, and focus on a few cell phones instead of dozens. This makes sense since, last year, Motorola released 27 new handsets in the market with minimal market acceptance. With this, Google directly competes with Android manufacturers like Samsung, HTC, LG, among others.
On July 24, 2012, Google disclosed that out of the $12.5 billion utilized for the purchase of Motorola Mobility, the company attributed only $5.5 billion of that to patents and developed technology. While Google essentially acquired Motorola Mobility for its vast patent portfolio, it does seem to be interested in getting into the hardware business and the acquisition of Motorola seems to be the easiest way.
For its quarter ending June 30, 2012, Google reported that Motorola generated revenues of $1.25 billion or 10% of total revenues in the second quarter of 2012. While the mobile segment accounted for $843 million revenues, the home segment accounted for $407 million revenues. Motorola Mobility’s hardware division reported a loss of $233 million.
With Motorola’s change in strategy to concentrate on fewer phones, it’s needless to say that Motorola will concentrate on smartphone-only segment. It needs to be seen whether Google assigns Motorola to manufacture its fresh Android Vanilla revision that Google releases every year with Nexus series.
With its Nexus series, Google brings new version of Android on a high-end hardware which then becomes an industry standard for upcoming Android handsets for other OEMs. Previously, Google had partnered with HTC, Samsung, and Asus to manufacture Nexus smartphones and handsets. Now that the Motorola acquisition is completed, it needs to be seen whether Google comes up with home made Nexus device this year, expected to come out by December 2012.