Motorola Failure

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Motorola Mobility, the ailing cellphone maker that Google bought in May, told employees Sunday that it would lay off 20 percent of its work force and close a third of its 94 offices worldwide. The cuts are the first step in Google's plan to reinvent Motorola, which has fallen far behind its biggest competitors, Apple and Samsung, and to shore up its Android mobile business and expand beyond search and software into the manufacture of hardware. The turnaround effort will also be a referendum on the management of Larry Page, Google's chief executive, whose boldest move has been the $12.5 billion acquisition. Though Google bought Motorola partly because of its more than 17,000 patents, which can help defend against challenges to the Android operating system, it also planned to use Motorola to make its own, better smartphones and tablets. One-third of the 4,000 jobs lost will be in the United States. The company plans to leave unprofitable markets, stop making low-end devices and focus on a few cellphones instead of dozens, said Dennis Woodside, Motorola's new chief executive, in a rare interview. "We're excited about the smartphone business," said Mr. Woodside, who previously led Google's sales and operations for the Americas. "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." But some analysts wonder whether Google can succeed in the brutally competitive, low-margin cellphone business. "Ninety percent of the profits in the smartphone space are going to Apple and Samsung, and everyone else from Motorola to RIM to LG to Nokia are picking up the scraps of that 10 percent," said Charlie Kindel, a former manager at Microsoft who writes about the mobile industry. "There's no real sign that's changing anytime soon." It was not always this way. Motorola executives like to talk about its glory days. The...
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