Motorola Mobility, the ailing cellphone maker that Google bought in May, told employees Sunday that it would lay off 20% of its work force and close a third of its 94 offices. This includes shrinking of its operations in India.
The cuts are the first step in Google’s plan to reinvent Motorola, far behind its biggest competitors, Apple and Samsung, and to shore up its Android mobile business and expand beyond search and software into hardware.
“It will shrink operations in Asia and India, and centre research and development in Chicago, Sunnyvale and Beijing,” Motorola’s new chief executive Dennis Woodside said.
The turnaround effort will also be a referendum on the management of Larry Page, Google’s CEO, whose boldest move was the $12.5 billion buy.
Though Google bought Motorola partly because of its more than 17,000 patents, which can help defend against challenges to the Android operating system, it also planned to use Motorola to make its own, better smartphones and tablets.
A third of the 4,000 jobs lost will be in the US. The company plans to leave unprofitable markets, stop making low-end devices and focus on a few cellphones instead of dozens, Woodside said.
“We’re excited about the smartphone business,” said Woodside, who previously led Google’s sales and operations for the Americas. “The Google business is built on a wired model, and as the world moves to a pretty much completely wireless model over time, it’s really important for Google to understand everything about the mobile consumer.”
But some analysts wonder whether Google can succeed in the brutally competitive, low-margin cellphone business.
“Ninety per cent of the profits in the smartphone space are going to Apple and Samsung, and everyone else from Motorola to RIM to LG to Nokia are picking up the scraps,” said Charlie Kindel, a former Microsoft manager.
NYT & PTI