Job cuts renew fears that Motorola's patents matter most to Google
But Motorola also has a long-term commitment to advanced technology
Computerworld - Google's decision to cut 20% of the workers from its Motorola Mobility unit re-ignited fears that Google was primarily after the 17,000 patents Motorola held when it was acquired in May.
"Everyone at Motorola is asking [if Google just wants its patents] and fearing the answer," said Jeff Kagan, an independent analyst. The 4,000 job cuts Google announced are "an earthquake up and down the hallways of Motorola Mobility. Google has never laid off workers like this before so this is also an unsettling feeling in the hallways of Google."
Indeed, a rich store of patents has become a kind of insurance policy for smartphone and tablet makers, as the recent buying up of patents by various parties and the Samsung-Apple court battle shows, analysts said.
Motorola previously announced its intention to cut back on the number of phone models it makes (there were 27 announced in 2011) to achieve greater efficiencies in a crowded smartphone market. The view was reiterated in a statement Motorola filed Monday with the Securities and Exchange Commission.
That SEC document states that the job cuts and other moves are "designed to return Motorola's mobile devices to profitability after it lost money in 14 of the last 16 quarters." Motorola will "simplify" its mobile product portfolio, shifting from feature phones to "more innovative and profitable devices," the statement said.
One source close to Google, who spoke on condition of not being identified, said the $12.5 billion that Google invested in Motorola is a long-term bet and a commitment to Motorola and to its smartphones and tablets. Reports that Motorola has created an Advanced Technology and Projects division with elite researchers bolsters the view that Google will have a continued interest in Motorola.
In addition to cutting 4,000 of about 20,000 workers, Motorola will close down or consolidate about one-third of its 90 facilities, the filing said.
The market seemed to like the job cuts and other moves. Google's stock price climbed 2.4% to $657.39 on the Nasdaq at mid-day Monday.
Nonetheless, some analysts said that Google's primary interest in Motorola could be for the patents, some of which date to the very creation of radio communications and therefore could form a broad basis for Google to defend itself in patent disputes from Apple or others. Also, Google launched its own branded tablet in July, the Nexus 7, that is manufactured by Asustek, while Motorola makes its own Android tablets.
"If Google just wants the patents, which is of course possible, then it's just a matter of time before they let more workers go," Kagan said. But he also said that Motorola workers understand their product and if Google wants to continue such products, "it would make little sense to let the workers go."
- Tips for Driving User Adoption in New Technology Deployment Read this checklist on tips for driving user adoption to see where you stand.
- 5 Ways Dropbox for Business Keeps Your Data Protected Protecting your data isn't a feature on a checklist, something to be tacked on as an afterthought. Download here to find out how...
- What is this "File Sync" Thing and Why Should I Care About It? All of a sudden, getting a file from your work laptop to your iPad became as simple as clicking "Save." So it's no...
- The Keys to Securing Data in a Collaborative Workplace Losing data is costly. IT professionals have spent years learning how to protect their organizations from hackers, but how do you ward off...
- Why Are Customers Really Deploying an NGFW? It seems every IT Security expert is talking about the NGFW, but what are people really doing? This webcast covers 5 real-world customer...
- Charting Your Analytical Future - "Making predictive analytics part of your business processes" Webinar This session will show how predictive analytics can be used throughout the organization by anyone looking for answers and how organizations can make... All Smartphones White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!