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Google To Cut 4,000 Jobs At Motorola In Restructure
2012-08-13 16:25:12 (211 weeks ago)
Posted By: Intellpuke

Motorola Mobility, the once-dominant but now ailing mobile handset maker, has told its staff that it is cutting 20% of its staff – about 4,000 people – and will close about a third of its 94 worldwide offices.

In an SEC filing, Google said that the severance costs could be up to $275 million in the two quarters to the end of the year and that there will also be "significant" other restructuring costs as it tried to restore the phone business to profitability.

Two-third of the job losses will come outside the U.S., says Google in the filing.

The company now plans to build high-end phones with sensors to detect people's entry into rooms, longer-lived batteries, higher-quality cameras and is recruiting artificial intelligence and supply chain experts to that end.

The moves are the first signs of a complete reorganization under the ownership of the search giant Google, which completed its $12.5 billion acquisition of Motorola Mobility (MMI) in May, and appointed its own Dennis Woodside to run the company, displacing Sanjay Jha, who had run it since August 2008.

Motorola once dominated the phone business, but the arrival of smartphones and particularly the iPhone hit its business. Although it tried to recover by adopting Google's Android software for its smartphones early on, soon after Jha took over, it has not been able to break Apple's grip on key parts of the U.S. smartphone market, and its handset division has lost money in 14 of the past 16 quarters, while its share of both the smartphone and feature phone markets have shrunk.

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The company is retrenching to the U.S., and will stop competing in unprofitable markets and cease offering low-end phones, to concentrate instead on a few phones rather than 27 it presently markets, Woodside told the New York Times (NYT) in an interview.

''We're excited about the smartphone business," Woodside, who previously led Google's sales and operations for the Americas, told the NYT. "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 indicated previously that it bought MMI in order to gain access to its patent portfolio, and that it would not give it any special treatment over other companies building Android handsets. Some rivals to MMI such as Sony, HTC and LG, which are struggling in the smartphone market, are concerned that MMI may get "most favored nation" status in funding and management, and access to new technology from Google.

Woodside has embarked on a top-down shakeup in which 40% of MMI's former vice-presidents have been let go. He told the NYT that he wants to make MMI's phones cool again, and is setting up an "advanced technology" group, headed by Regina Dugan from the Pentagon's Defense Advanced Research Projects Agency (DARPA). Dugan, the NYT said, is hiring metals scientists, acoustic engineers and artificial intelligence experts.

Meanwhile MMI is also tightening its supply chain, building fewer models and using half as many components under the direction of former Amazon Kindle supply chain manger Mark Randall.

MMI faces the same problems that other handset companies do: that Apple and Samsung together have locked up around half of the entire smartphone business, and about 90% of its profits, leaving others fighting for the remaining 10%. In the past quarter RIM, Nokia, LG and Sony have all lost money in the handset business, with only HTC and some Chinese companies competing at the low end making profits.

Intellpuke: You can read this article by Guardian Technology Editor Charles Arthur in context here:

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