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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 Reclaimer77 on 8/13/2012 3:16:41 PM , Rating: 2
No matter what you want to say, Reclaimer, the reality is that the persons aligned with the Republican party have, for the last 3+ years had as their sole agenda keeping anything from happening that might have the possibility of making Obama or the democrats look good. It does not matter that the economy, immigration, taxes, etc., etc., etc. do not get better. Just don't let those democrats have one tiny chance at looking good.

Obama and the Democrats had a monopoly on political power his first two whole years of office! The Republicans were in no position to stop anything, and didn't stop anything. I reject this premise that "Republican obstructionism" is the reason everything is so crappy.

There really is no bipartisan capability in Washington anymore.

That's because "bipartisan" has been redefined as Republicans giving in. Every time. Democrats don't compromise. Democrats don't give in. They just cry foul until we do. And the country suffers!

RE: I look forward to the day...
By Shadowself on 8/13/2012 4:35:43 PM , Rating: 2
Obama and the Democrats had a monopoly on political power his first two whole years of office!
Interesting. There is no such thing as "monopoly power" in Washinton unless you have a 76% majority in both houses and the Presidency. You seem to forget about certain types of procedural votes that require a 60% or 2/3s or 3/4s majority to actually get things done. It's interesting that you are forgetting about the filibusters and threatened filibusters and the tricks and tactics used to keep things from coming to the floor for full votes those first two years.

Even a minority can cause havoc in each house if they are united and want to stop anything from progressing. You are naive if you don't know that. You are foolish (or worse) if you know this and are just ignoring that it has happened regularly over the last 3+ years.

AND I never said it was Republican obstructionism that caused this problem or even kept it this way. BOTH parties are at fault. BOTH sides won't compromise.

This kind of political gridlock has been growing over the past three decades. It is not new, but I truly believe it is the worst it has been in my long lifetime.

And yes, I DO know whereof I speak. I've personally written drafts of bills that got put into law. I've personally sat down with both congressmen and senators to discuss getting certain things through. I've personally worked with congressional staffers so they understood my position. No, I'm not, and never have been, a lobbyist. I have hired them (and the the last time I hired one well over a decade ago his fee was over $400 an hour), but I've rarely had the stomach to use them.

I am not saying I've always been altruistic. I have not. However, I never pushed a concept that was solely in my own best interest -- and I've occasionally deferred all self interest for the greater good.

It is that last part that seems to have all but evaporated from Washington -- which is part of the reason I got out of the game almost a decade ago.

You claim
That's because "bipartisan" has been redefined as Republicans giving in. Every time. Democrats don't compromise. Democrats don't give in. They just cry foul until we do. And the country suffers!
Well, the Democrats claim the exact same thing.

I'm not going to search for the link (but I'm sure it's out there for anyone wanting to spend the time to search for it), but the current Speaker of the House stated in an interview within the past year that he'd rather see the economy not improve than see Obama re-elected. I'm sure there are similar statements that have been made by prominent Democrats too -- they'd rather not have certain Republican initiative that might work to improve the country go forth if it meant that Obama might lose.

That really is the problem. "It's either my way or no way at all." It would seem as though in the District of Columbia they have forbidden the use of the word "compromise" and burned every book with that word in it.

"I f***ing cannot play Halo 2 multiplayer. I cannot do it." -- Bungie Technical Lead Chris Butcher

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