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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: HWTN.org]

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 Amazon.com, 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].

Droid RAZR MAXX
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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This article is over a month old, voting and posting comments is disabled

I will vote with my wallet... against Motorola
By tayb on 8/13/2012 6:15:46 PM , Rating: 2
I will vote against Motorola with my wallet. I bought a Droid X in October 2010 and it has been one of the biggest POS devices I've ever owned.

1. No software updates
2. GPS turn by turn flakes out half the time I try to use it. The voice will change to a smooth talking woman and then it will just turn to chimes when I'm supposed to turn. I have to reboot my phone to get turn by turn back and repeat the whole process.
3. Having an SD card in my phone greatly reduces the performance of my phone
4. I can't take pictures without my SD card in the phone. Despite having 8GB of internal memory that is largely unused.
5. When I make a phone call I have to put my phone on airplane mode and then take my phone off of airplane mode to get 3G working again. Every. single. time.
6. The battery will not last through the day with light use.
7. It came loaded with tons of bloatware that I couldn't remove without rooting. (How is this different from iPhone?)
8. I do not have any voicemails yet I have a voicemail notification in my notification bar that I am unable to remove. Yes, I've done tons of research and the answer is always "drop the OS and reload it." No thanks.
9. If I leave my phone on for more than 2-4 days without restarting it the camera app will not load. It will just crash. Before I go someplace I might want to take pictures I always reboot my phone. How stupid.
10. If I want a GPS signal, I have to reboot my phone. Trying to get a GPS signal otherwise is a complete waste of time. I can stand in the middle of a field with the phone in the air on a 20 foot pole and it will search and search and search.

And I could go on. I know these problems are not unique to my phone because my father purchased a Droid X a few months before me and has these exact same issues. I'm sure not everyone does but I also not it isn't a completely isolated case.

As such I'll wait a good long while before I even considering another Motorola phone, if ever.




By Belard on 8/15/2012 7:58:46 AM , Rating: 2
You're talking about 2010 technology... you describe typical problems of many Android phones... HTC and Samsung and many of those problems are not related to the manufacture.

So, here is my 2010 Samsung to counter yours.
1 - Barely any from Samsung, but you know you could root it (I don't either - so whatever) Well after a year late.
2 - Half ass GPS
3 - didn't notice, but had to buy in order to xfer files to and from phone since Windwos7 wouldn't talk to the damn thing.
4 - no problems. Defect on your particular phone?
5 - no problems. Defect on your particular phone?
6 - That is all Smart Phones. They are better now than then.
7 - That is ALL USA Smart Phones. Carrier Specific crap apps. But an international version for $500~800. My SONY from 2008 was international, no bloat. Friend had at&t version, had crap but less ring tones and games... otherwise same phone.
8 - no problems. Defect on your particular phone?
9 - Your phone is bad? If defective, most carriers have a 30 day return deal. Also, at&t has a $3 monthly insurance deal to take care of damaged/defective phones.
10 - All Samsung Galaxy S1 (like mine) have crap GPS. A software upate did help... so its only mostly crap GPS.

Why did you get the same phone as your dad?

I'm looking to get the MC Atrix 4G... it feels so much better than Samsung GS3, I know its camera is sub-par - but its $100. If it sucks before the 30 days are up... I may get the SGS3 or Nexus phone.


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