Motorola Mobility, acquired by Google in May 2012, will terminate 4,000 employees and close or consolidate approximately one-third of its branches, according to Google’s filing with the U.S. Securities and Exchange Commission (SEC). The decision was made Aug. 3. Employees will be notified this week and next, according to Google.
“This is a natural progression of a lot of things when one company acquires another, especially when there’s some overlap,” says IDC senior research analyst Ramon Llamas. “The acquired company will usually suffer some downsizing of some sort.”
Dismissals will occur across the organization, with approximately one-third of the reductions set to occur within the U.S., according to the SEC filing. Google anticipates a severance-related charge exceeding no more than $275 million, according to the SEC filing.
“While we expect this strategy to create new opportunities and help return Motorola’s mobile devices unit to profitability, we understand how hard these changes will be for the employees concerned,” says a Google spokesperson.
With recent settlements forcing Google under the microscope, Llamas claims the search engine behemoth may have cut its Motorola employees for the sake of protecting its own brand. “They were after patent protection all along,” Llamas says.
Llamas states Motorola’s wide target audience and desire to be “all things for all people” also may have contributed to the mobile company’s downfall. “Google is getting out of that entry level mass market,” Llamas says. “You’re losing fewer devices if you’re going after one portion of the market.”
In attempts to compete with industry high rollers Apple and Amazon, Llamas predicts Google will target consumers who crave a more high-end smartphone through Android software, such as with the Samsung Galaxy S3. “It’s Android at its purest,” Llamas says.
“This may alienate companies like HTC who, in hawking high-end devices like the HTC One-X and others, are still playing second fiddle in the Android ecosystem to giants like Samsung,” says Altimeter Group mobile analyst Chris Silva.
Yet, Silva believes that Google will take consumer targeting one step further by going for the triple-threat by expanding to multiple channels.
“Google is taking square aim at Apple and even Amazon by attempting to provide a media ecosystem with multiple touchpoints: the smartphone tablet and, eventually, the TV,” Silva says. “With projects like the failed Nexus Q and the currently-in-beta Google Fiber, Google is clearly looking to create a media presence that extends to the TV/living room.”
