Clearly, Google bought Motorola for its patents since it seems to be gutting different parts of the company. Today Google started telling staff in S. Korea that it is closing most of Motorola’s S. Korean operations. About 10 percent of the research and development department will be offered transfers but the majority of the rest will wind up on the Korean equivalent of the unemployment line.
According to The Next Web and All Things D, the closing is part of the continued restructuring that was announced back in August. At that time Google said that it was going to cut 20 percent of the workforce or about 4,000 jobs. The cuts in S. Korea follow Google’s other international closures in Asia, Europe, Middle East & Africa, Hong Kong, and Taiwan.
“These changes are designed to return Motorola’s mobile devices unit to profitability, after it lost money in fourteen of the last sixteen quarters,” Google said in the filing. “That said, investors should expect to see significant revenue variability for Motorola for several quarters. While lower expenses are likely to lag the immediate negative impact to revenue, Google sees these actions as a key step for Motorola to achieve sustainable profitability.”
When Google first bought Motorola, there was a fear that Google was going to begin producing its own Android smartphones. So far Google has partnered with different manufacturers to create “Nexus” branded phones and tablets that run the pure Android operating system and get the first software updates. There’s the Nexus 7 with Asus, the Nexus 10 with Samsung and the Nexus 4 with LG. The worry was that Google, like Microsoft, was going into the hardware business and would be cutting out its former partners. With the ongoing downsizing of Motorola, that seems less likely.
While Motorola’s patents will hopefully bring Google some relief in the ongoing patent wars with Microsoft and Apple, the hardware side of the company has not fared well as is evidenced by the statement above. Cellphone profit margins have narrowed considerably over the years as more and more companies have jumped into the market. HTC and Nokia have also felt the crunch and have downsized. Compared to Nokia’s loss of 30,000 jobs since 2011, Google’s reduction of Motorola by 4,000 seems minor – except for the people losing their jobs.