Perhaps Cuts in Android Tablets, Smartphones Are Next

By Don Reisinger  |  Posted 2012-08-13

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

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.

Perhaps Cuts in Android Tablets, Smartphones Are Next

5. It's the plight of non-Samsung Android vendors

Google's decision to lay off so many Motorola employees might provide some insight into the plight of being an Android vendor. Even with a trusted company brand and products that aesthetically appeal to customers, today's Android vendors are running with too many employees and not enough innovation. Google's layoffs might just prove that point.

6. Maybe Motorola didn't know what to do

As noted, Google has said that it wants to take a hands-off approach to Motorola. And yet, it's very much hands-on at the moment. That might make some wonder if Motorola's management really knows what it needs to do to be successful. Google is simply unwilling to give Motorola's executives enough rope to get themselves into trouble. And with $12.5 billion at stake, who can blame the search company?

7. The move doesn't seem all that strategic

According to Google, the cuts are being made across all of Motorola's divisions, which seems to indicate that the company has no real strategic vision beyond the layoffs. That's a real problem. Typically, layoffs are designed to target areas that need improvement, but maintain those that are doing well. That Google conducted a slash-and-burn campaign at Motorola indicates a lack of a clear view on what to do next.

8. Tablets are getting the boot

According to several reports, Google's next move will be to eliminate tablets, so the company can focus its mobile efforts on smartphones. That's probably a smart move. Motorola's tablets are by no means popular in the mobile space, and they're costly to produce. At this point, Google needs to revive Motorola–not feed into its troubles.

9. Fewer smartphones, too

Although Motorola will be focusing on smartphones, it's possible the company won't be releasing the number of handsets it has offered up in years past. From now on, it appears as though Google wants to deliver only a handful of high-quality smartphones, according to reports, and follow a more Apple-like model. Will it work?

10. Maybe there was a reason competitors didn't care

Perhaps Google's slash-and-burn policy at Motorola is revealing a soft underbelly at the handset maker. Perhaps that soft underbelly was the reason that there was so little apparent concern by other Android mobile device OEMs that Google was acquiring a competitor. It appears that Motorola was in deep trouble long before Google acquired the company. Competitors like Samsung, HTC, and others, found no reason to protest because of it. After all, what are the chances of Motorola turning things around anytime soon?

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