Motorola's 20 Percent Staff Cuts: What It Says About Google's Management

 
 
By Don Reisinger  |  Posted 2012-08-13 Email Print this article Print
 
 
 
 
 
 
 

NEWS ANALYSIS: Google has decided to cut 20 percent of Motorola's workforce. What do these staff cuts mean for both companies? Are they a prudent staff reduction to boost profitability or early signs that Google made a mistake?

When Google announced that it would buy Motorola Mobility for $12.5 billion, the company's critics came out in droves, saying that it would hurt the mobile space. Google, meanwhile, reassured critics that it would stay far away from Motorola and allow the company to operate independently.

However, on Aug. 13, Google announced that it was cutting 20 percent of Motorola's workforce. About one-third of those employees would be cut from the United States, while the remaining two-thirds would be cut overseas. The move is designed to increase Motorola's chances of sustaining profitability over the long-term, according to Google.

But perhaps the cuts say much more than that. Whenever a company as successful as Google reduces a firm's workforce, it indicates issues and certain hints at its future strategy. That can't be overlooked in this case.

This is what Google's Motorola cuts say about the company:

1. Expect more Google involvement than originally thought

Although Google said that it would allow Motorola to operate independently, it's clear now that the search giant will be influencing at least some decisions at its new mobile division. Layoffs are a keen indicator of how much involvement a parent company has. In this case, Google has quite a bit of influence.

2. Google's management is worried

There's a real chance here that Google's management is starting to realize that it might have bitten off more than it can chew with Motorola. For $12.5 billion, Google bought a company that, while rich in patents, is quite poor in terms of consumer appeal. Layoffs might be just the first attempt on Google's part to find a way to make Motorola look like a good buy.

3. It really was about the patents

Then again, the layoffs might simply indicate that Google really only cared about Motorola's patent portfolio. The company made it known that the patents were integral in its decision to acquire Motorola, and by gutting the mobile firm's staff, maybe it's simply saying that the patents were worth far more in the acquisition than outsiders might have thought.

4. Product cuts are next

Motorola is well-known for its smartphones and tablets, but the company offers a host of products across the home-entertainment and networking industries. That said, it appears that Google really only cares about the company's mobile options. That might be enough for Google to soon announce significant product cuts at Motorola.



 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 
 

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