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Struggling phonemaker is in for some painful changes

Google Inc. (GOOG) announced the first step in its plans to overhaul struggling recent acquisition Motorola Mobility on Monday.  As part of the overhaul it will cut 1 out of every 5 jobs at the phonemaker unit, and will close roughly 31 of the 94 offices worldwide.

I. From the First Cell Phone to Near Last

In the wireless industry there is perhaps no company with as long and rich a history as Motorola.

Founded in 1928, Motorola was a pioneer in the world of wireless communications, inventing the world's first wireless walkie talkie in 1940 and the first commercial cell phone in 1973.  It would go on to play a crucial role as an early maker of mobile devices and infrastructure.

But Motorola's problems have stretched for around a decade and a half as the golden glory of its heyday faded.

Motorola first cell
Motorola literally invented the cell phone, but almost exited the market amid failing sales.
[Image Source: Know Your Cell]

Since the late 1990s Motorola has languished, first being overtaken by Finland's Nokia Oyj. (HEX:NOK1V) and Research in Motion, Ltd. (TSE:RIM) in various markets, then later by young guns like Apple, Inc. (AAPL) and even a revitalized Samsung Electronics Comp., Ltd. (KSC:005930).  A minor hit in 2004 -- the RAZR -- quickly became another disappointment after Motorola failed to continue to push the design and feature envelope, preferring self-referential sequels.  

A friend of mine in the software industry close to the phonemaker recently told me a story of how a former Motorola executive was sent to check out a promising startup as a potential acquisition in 2009.  He returned to report that the company was of no real interest.  

Weeks later he had quit Motorola and joined the startup.  The name?  FourSquare.

Motorola had for decades attracted innovators, but sadly stories like that defection were commonplace for the phonemaker as it stumbled through a decade of disappointing earnings which eventually culminated in hard red losses.

Of all the wrong moves Motorola made, the company did make one wise bid, becoming an early adopter of the Android operating system, a move that temporarily halted its losses in the smartphone market and gave it a small breath of life.

II. Google's Restoration Begins With Fresh Blood at the Top

Now it's up to Google, makers of Android, to finish sorting out the mess.  The software giant bought a $12.5B USD "fix-me-up" in Motorola, and now it's tearing down the mildewed walls and uprooting the rotting floorboards.  And it's not afraid to start cutting close to home.

Globally Motorola employs around 20,000 folks -- about as much as RIM did at its peak in 2008.  Of those, 4,000 will now be cut.  That leaves Motorola with a workforce that will still be more than 50 percent bigger than struggling peer RIM.  The cuts will be painful, though, with around 1,300 -- roughly a third -- coming from the phonemaker's home country, the U.S.

Fixer upper
Motorola Mobility is a big fixer-upper for Google. [Image Source:]

Dennis Woodside, new CEO of Motorola tells The New York Times in an interview that the key to the phonemaker's revival will start with pulling out of markets where Motorola is actually losing money.  He comments, "We’re excited about the smartphone business.  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 going to be important for Google to understand everything about the mobile consumer."

Google has also recruited Mark Randall, a star up-and-comer from, Inc. (AMZN) (and also a Nokia veteran), who is acting as Motorola's new supply chief.  He says that when he came onboard Motorola's parts chain was a mess, but that by using fewer suppliers and 50 percent less parts he will be able to substantially cut costs.

Other key additions include former DARPA chief Regina Dugan, who will lead Motorola's advanced technology group, and Vanessa Wittman -- former CFO of brokerage firm Marsh & McLennan Comp.s, Inc. (MMC) -- who now steps in as Motorola's CFO.

III. Motorola Has Some Advantages, Even Without Special Android Favors

As every analyst or foe states at every possible opportunity it should be interesting to see whether Google shows any signs of favoritism towards Motorola, over its third party Android partners.  So far Google's approach seems to mirror Microsoft's handling of partner Nokia -- to trade employees, but steadfastly avoid any sort of exclusive product or software offerings.

Motorola has some advantages going ahead.  Apple's case against it has been dismissed in the U.S., making it the first of the Android Big Three to be out of that legal nightmare.    In the features department, Motorola's phones like the RAZR MAXX hold the battery life crown, even beating Apple's perennial battery life performer, the iPhone [Source: AnandTech].

The RAZR Maxx remains king of battery life. [Image Source: Verizon Wireless]

But Motorola must not waiver from releasing high-profile flagship phones or it risks losing the publicity battle with polished market leaders Samsung and Apple -- both kings of public relations hype.

The fresh blood must deliver oxygen to Motorola's atrophying muscles.  That much is apparent after the latest quarter of losses followed by a new regiment of layoffs and cost cutting.

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RE: I look forward to the day...
By retrospooty on 8/13/2012 2:40:20 PM , Rating: 2
You have to admit, truer words have never been spoken.

" The bottom line is that both candidates will continue to appease special interests with the help of Congress."

I am voting for Romney, simply because Obama has proven he can't do anything right regarding the economy and cant stop the federal govt's addiction to spending other peoples money, and makes zero effort to even try... With that said, I dont have high hopes. Both parties have sold us out, and to act like they havent doesnt help fix it.

RE: I look forward to the day...
By Belard on 8/15/2012 7:40:06 AM , Rating: 1
And I will ask you an honest question...

Have you seen the republicans actually try? Remember, the GOP was fighting to keep TWO different engines for the F35 when the Pentagon and DEMS only wanted to buy one... saves money.

So you said Obama hasn't done anything, why do the neo-con talk shows scream about how Obama is doing to much? Which is it? Ever thought perhaps you may want to refer to actual numbers and information to reach a conclusion?

I cannot just POST XYZ and say there. YOU need to do this yourself.

Example: Person A says : This B guy did nothing, he spent money and picked his nose. Thats my store and I'm sticking with it.

Person C says: GAO and other valid sources (non partisan) state that XYZ$ amount of money was spent in 2006, 2007, 2008, 2009, 2010. The graph here shows XZ levels based on information from the IRS and other sources.

There is a difference is saying a lie to make your point using facts.

An example is when some neo-con screams about the 22 job bills the Republicans have tried to pushed through the house. I looked up the actual HR Bills. You can see WHO proposed the bill, the title, dates, what it actually does. its status, etc. Its all available FROM our government.

Those 22 job bills... not jobs bills. Mostly removes pollution laws for oil companies.

Some examples:

HR872 = Reducing Regulatory Burdens Act of 2011 (de-regulating poisons)
HR910 = Energy Tax Prevention Act of 2011
HR 1230 = Restarting American Offshore Leasing Now Act (We are drilling more than ever in the USA)

How about this one: HR 2021 = Jobs and Energy Permitting Act of 2011 Wow, that is a jobs bill, it had to pass! Wait, what does it do? HR2021 really does this: EPA shall have no authority to consider any matter regarding the consideration, issuance, or denial of such permit. ie: The EPA has little or no power to deny permits to oil companies that pollute air.

It doesn't create a job. It saves Koch, Haliburton, BP and other companies money for their screw ups. I don't recall the oil companies struggling to make a profit. And they are doing so good with profits, we *WE* give them handouts? you can read it yourself.

Its passed the house, but it would be killed in the Senate, so it sits... waiting for GOP control to come in and make this law.

By all means, explain how drinking oil is good for you? Its not, oil is toxic. I so some work in the oil industry. Actually, we even drink a bit of oil depending on what you eat. FD&C Red Dye #40 is made from petroleum or coal tar. WTF?!

This is in most food that is RED. This include cherries, candy, soda pop... look at the ingredients. Aren't you glad we have a social system that requires us to LIST some of these things that are in our food. (Not all) Did you know that when you buy most red apples, they are actually green or kind of red, so they spray apples with Red #40 to they look so yummy.

Look up Pink Slime. Even my stupid gov. Rich retard Perry went to a processing plant for that crap. Its the parts of the cow people don't want. yeah, I understand about hot-dogs. But when you get ground beef you WANT 100% ground beef right?

Here is how you can spot Pink Slime burger meat. Next time you go to Walmart, Sams, Safeway. On the package which has change recently, now says things like "100% Natural Pure Ground Beef*" See the "*" It'll say "minimally processed" Well, that sounds innocent. That part of the technically word for Pink Slime. Up to 25% of that "beef" is not meat. Its been poisoned and color-dyed, compressed, then shipped then mixed with real beef. Some Grocery stores sell 100% beef.

I pay a bit more for the meat. How much? About 25 cents a pound! And you know what, it tastes better, cooks better.

But by all means, its a free country - eat as much pink slime as your want. For my family, I'd like for them to not eat shit.

What the point of this? There is a lot of behind the scenes crap going on for people like THEM to make money off the tears, blood and sweat off the people like YOU.

You have a choice.

PS: yes, both parties are sell outs... I'll go with the least dangerous one, the one that is not out to give billionaires taxes breaks (we did very well in the 90s mind you) and attack women rights - because sticking government in women vagina's creates jobs.

This country DOES not belong to YOU, the GOP, Koch, Grover Norquist, Limbaugh and especially foreigners like Murdoch and Alwaleed bin Talal. It belongs to *ALL bloody Americans* and our stupid govt. has to make laws FOR the PEOPLE, not corporations. They represent us. In the past - compromise means working together, both sides get something what we want. Not JUST you, but not me.

"We don't know how to make a $500 computer that's not a piece of junk." -- Apple CEO Steve Jobs

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