Google intends to cut one-fifth (20 percent) of Motorola Mobility workers and shut down 94 offices of the American phone manufacturer worldwide, the New York Times reports.
The layoffs and closures will probably come most difficult to US employees of Motorola Mobility, as the search giant and new owner drops 4,000 from the phone maker’s workforce, with a third coming from American workers. The company’s management will also be hit, as Google prepares to shake off 40 percent of Motorola’s vice presidents.
New Motorola Mobility CEO Dennis Woodside told the New York Times that the phone maker will “leave unprofitable markets, stop making low-end devices and focus on a few cellphones instead of dozens.”
He said that Motorola will aim for cooler products in the process by putting together features such as “sensors that recognize who is in a room based on their voice” and enhanced camera sensors.
“We’re excited about the smartphone business,” Woodside added. “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.”
The past few years has been a trying experience for mobile industry pioneer Motorola, as it continues to struggle against current market leaders Apple and Samsung, both of which account for 85 percent of the whole smartphone market and 90 percent of profits.
Forrester Research mobile analyst Charles Golvin sums it up by saying, “It got left in the dust by the competition and kind of missed the smartphone transition.”
Motorola has confirmed the layoffs. A spokesperson said the following statement to The INQUIRER,
Today, Motorola Mobility announced that it’s reducing its headcount by approximately 4,000.
Two-thirds of the reduction is set to occur outside of the U.S. In addition, Motorola plans to close or consolidate about one-third of its 90 facilities as well as simplify its mobile product portfolio – shifting the emphasis from feature phones to more innovative and profitable devices.
While Motorola expects this strategy to create new opportunities and help return its mobile devices unit to profitability, it understands how hard these changes will be for the employees concerned. Motorola is committed to helping them through this difficult transition and will be providing generous severance packages, as well as outplacement services to help people find new jobs.
“These changes are designed to return Motorola’s mobile devices unit to profitability,” Google said in a filing with the U.S. Securities and Exchange Commission.
Google expects to take a severance-related charge of up to $275 million mostly in the third quarter, it said in the filing.
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