10 Motorola Mobility Headaches Google Must Cure Quickly

NEWS ANALYSIS: Motorola was one expensive purchase for Google and now, it’s causing major management headaches for the search giant as it searches for a way to make this huge division profitable.

After Google acquired Motorola Mobility for $12.5 billion in May 2012, the search giant said that the focus of the deal was patents. Google reassured its Android partners that Motorola wouldn’t get special treatment, and told regulators that it would allow Motorola to operate independently without fear of too much oversight from its corporate overlord. For the most part, Google has made good on that promise.

However, as Motorola’s parent company, Google has a fiduciary responsibility to shareholders to ensure it can prove to them that the deal is going to produce a decent return on this massive capital investment.

In its effort to do just that, Google has been forced to lay off a large chunk of Motorola’s staff and consider selling off at least one division. It turns out that Motorola might have been worth much less than the $12.5 billion Google invested, and the only way for the search giant to get its cash back is to trim the operation and refocus it.

Doing so might be difficult. Motorola is in a bad way. The company generates a comparatively small amount of revenue in the mobile space and its products have yet to even match Samsung’s. There are a number of problems that, if not fixed promptly that could prove that the deal was an expensive mistake that brings down Motorola and harms Google’s profitability and credibility with investors.

Read on to find out more about Motorola’s troubles and what the company should do to address them.

1. Smartphone relevance

Motorola simply isn’t a powerful player in the smartphone market these days. By the end of the first half of 2012, Motorola owned just 11.7 percent of the entire mobile market and wasn’t even able to capture a respectable share in the smartphone market. Google needs to start working on Motorola’s smartphone designs and marketing. Between them, both techniques should address some troubles.

2. Motorola is absent from the tablet market

Motorola was one of the first companies to get into the tablet market with its Xoom slate. However, the company has bowed out of that market after experiencing tough losses. Looking ahead, Google has no choice but to drag Motorola back to the tablet space with products that customers might actually care about. Like it or not, tablets are the future.

3. The set-top box business is a drag

Motorola makes set-top boxes for cable providers. And although it has a sizable share, there isn’t much growth in that market in the coming years. Plus, the financial upside isn’t major. Google is right to want to sell the set-top box operation and get out of that space entirely.

4. Assessing the value of patents

Google offered Motorola a huge premium on its stock price because of its patent portfolio. However, how valuable are the more than 20,000 patents Motorola owns? Granted, the industry is more litigious now than ever and patents are important, but Google might have more luck licensing the intellectual property and getting some of its cash back.

Don Reisinger

Don Reisinger

Don Reisinger is a longtime freelance contributor to several technology and business publications. Over his career, Don has written about everything from geek-friendly gadgetry to issues of privacy...