Android Central

Motorola has been undergoing significant "restructuring" for awhile, and Google recently said that even more than expected. Google increased the estimated cost of severance-related charges from $275 million to $300 million for the third quarter, and that another $40 million in facilities costs were possible. Google addressed these changes in a statements.

"Motorola has continued to refine its planned restructuring actions and now expects to broaden those actions to include additional geographic regions outside of the U.S. ... Motorola continues to evaluate its plans and further restructuring actions may occur, which may cause Google to incur additional restructuring charges, some of which may be significant."

Between the uphill battle of making Motorola profitable and the patent disputes that it has exposed Google to (nevermind defended them from), it's getting harder to see the $12.5 billion acquisition as a good idea. On the other hand, Motorola wasn't in particularly good shape when Google acquired it; one can only imagine how much longer Moto would have lasted on their own. 

What do you guys think: has Motorola still not had a chance to prove itself as a worthwhile investment to the Android ecosystem, or is it becoming too expensive for Google to reasonably keep around? Was the acquisition worth it for the patents alone, or are we likely to see some really excellent devices come out of Motorola with Google behind them? 

Via: Reuters

 

Reader comments

Google says Motorola downsizing may be more expensive than anticipated

32 Comments

It was not worth the 12 billion. They will eventually make a profit on Motorola but not for a few years.

They may have spent $12.5 billion on the deal, but they get Motorola's $3 billion in cash as part of the deal. So the real cost is closer to $9.5 billion, which brings the price for just the patents inline with what was paid for Nortel's patents.

Plus Google get's a hardware manufacturer that they can either sell or put to work.

I think it was worth $12 billion.

I have to think that Google has a plan for Moto...They couldn't be foolish enough to spend 12 billion on a few patents that will likely provide no real benefit.

Google does dabble in a ton of different beta projects so who knows what they are thinking most the time.

Maybe...But how many are viable and something they actually need. The last lawsuit was what 6 vs Apple? Plus the kind of cash they spent on it will likely NEVER yield that sort of cash flow based on patents alone.

It took Apple what 3 years of fighting to win 1 billion from a DIRECT copy of them. Plus they don't even have the money yet, may not even get it.

So I'm hoping they have more in store than some lawsuits coming forward. But I do like Moto and would love to see them with more carriers and make some better Android handsets.

Direct copy? Really?

Apple still has not seen one cent of that 1 Billion, and I wager they never will.
And the thing that Apple claimed was the closest copy was found not to infringe, and now Apple owes 2.9 million for a false claim.

The patents prevent others from suing you. Not to sue other.

Because with 16000 of them you will be sure to find something the other guy is violating, and then you can arrange a simple trade.

What people don't know is fact that Motorola is one of biggest STB manufactures, thats why some people thing they buy it more for Google TV then phones.

I have a DroidX (I know, it's old) and prior to the last update (which will likely be the final update for the phone), I loved it.

Unfortunately for Moto, that final update has pissed me off so much so often that my next phone will be a Nexus. However, aRAZR Nexus could potentially get me to buy another Moto - I would at least consider it.

This year for motor is like a rebuilding year for a football team. They are in the tank and have issues all the way around.

Next year they get the can't miss number one pick that turns everything around. Google says they will be hands off, but behind the scenes will be another story

I really hope Google plan to stop keeping them at arms length and instead use them to force quicker and more timely updates for Android phones across the board. If they would have all phone truly supported for 2 years min and have updates out with in 3 months of the release then we could see some real changes. Not the crap like the Atrix 4g and Photon got of the ICS being canceled. Much less Jelly bean not even out for any of their phones yet.

Go visit the Atrix forum on Motorola's website. With petitioning going on and the huge Atrix user base...Motorola definitelyhas enough problems to worry about. Considering Motorola's inability to deliver on updates, there is a reason they have never been chosen for the Nexus line-up. Google has owned Motorola for about 6+/- months now, its safe to say Google has a hand in pulling updates for those phones knowing they have been promised for months up to a year almost. At this rate, if Google doesn't do something soon for Motorola things don't look good for them.

I think one of the biggest push Google could do to really help it is take charge. Make an announcement stating that from here on out anything and everything that is decided, designed, manufactured whatever is done by Google and not the remains of what's from Motorola. Google bought them, its time to put that well spent money to good use.

"Mootorola, you're finished. Your time in the mobile playing field is over, let go and let your new mom and dad guide you to prosperity for years to come. You did your best, but its over."

Google needs to get over the idea of letting Motorola operate as an independent entity and start managing them as the hardware wing of Google, an integral part of the whole body.

While I do have some sympathy for this idea, they are going to really tick off other phone manufacturers if they do this. I doubt they want to travel that road but we shall see.

As long as they do not provide favoritism to Motorola than I don't see why they would get ticked off.

They might be thinking that their partners may not be around very long. HTC isn't doing overly well, LG hasn't made a splash in the high end market, and Samsung iirc was developing its own OS.

So this might have just been an acquisition to ensure they can continue to have a future if stuff hits the fan.

Oem's are your friend until they aren't. Ask Microsoft. When you see things heading in the wrong direction, you do what you gotta do. Seriously, how many here would complain if Motorola put out 3 different models on all the carriers that had vanilla Android. None! Rather, there would be gnashing of teeth: "OMG, what model do I buy... I think I am having heart palpitations... OMG?!?!?!?"

I agree. All you have to do is look at Apple's business model to see that. Initially, Google did a great job getting Android out there through other OEMs, but there is only one OEM (Samsung) that is succeeding right now. Samsung just got busted for copying Apple. What would stop them from copying Android. Some say they are already trying to do it. Samsung is also supporting other OSs. Why wouldn't it behoove Google to create their own line of phones to compete? Who cares if it puts everyone else out of business. Everyone except Apple and Samsung, of course.

Well, let's see. Google bought Moto, then installed their people as the new tops execs, then those people reneged on commitments Moto had made to upgrade phones (and the 18 month commitment that Google had asserted) and Google wonders why Moto's business is sucking. Punit Soni is the new head of software and all he has done is to boldly assert that he can succeed where Moto's execs failed, and his plan to do that is to do less. No creative solution to the problems. Just throw a whole bunch of customers under the bus and pretend they never existed.

LAME!!! Both Google and Moto have let us down.

I feel more like they gave us $100 and shoved us on the first bus out of town...(although, we haven't actually seen the $100 yet).

I think they may have over paid for a company with as much red ink as Moto but I do think breaking into the hardware side is a positive for Google. Even if they sink $500 million into the restructuring they will still make out like bandits in the near future. Google had to know that they were looking at a 3-5 year turn around on this project. With Google's ingenuity, I honestly think they will be profitable before the 5 year mark.

I agree that a Nexus version of the RAZR MAXX HD would be great, although I do like the circles widget and the quick settings page, just not the bloat and locked bootloader. I have not seen any plans for a Dev Ed of that phone.

I really think that every phone should be unlockable with AOSP factory images available.

The new RAZR phones are not what we will be seeing from the company next year. Next year's phones should be more Google influenced.

What a terrible supposition the author of this article makes. "It's getting harder to see the $12.5 billion acquisition as a good idea." You do realize that Google has over $54 billion in current assets? Their patent portfolio includes TVs, set-top boxes, as well as mobile phones and software. Also, have you ever wondered why Apple is so valuable? Because they make the software AND the hardware. You guys constantly write articles about fragmentation and forking, well here is the defense. If other OEMs try to steal Android by copying it and calling it their own, ie..Touchwiz, Amazon, Sense, etc..., Android stays alive through the hardware (Motorola). You may see a day where there truly is a GOOGLE phone because Google tells all the other OEMs to go fuck themselves. This is pure speculation, but it protects them. Don't you think HP is shitting in their pants that Microsoft came out with their own tablet? Look at their stock price and see. Look at Google's stock price and see that. The author of this article/post has zero clue about business, especially this business. Geez.

I still don't see any justification for buying Motorola.
12 billion dollars? Really? They should have added
another zero and bought Samsung's Mobile division instead.
(120 billion dollars should cover it, no?)

1) Google got a huge tax break for buying a Motorola, who's in the red (around $3 billion off their taxes, as I recall). $300 million can is more than justified by the alone. Of course, that doesn't take care of the $12.5 billion they spent to buy Moto in the first place, but that can be paid for by a) Google's other profits, b) the money they save by protecting themselves from patent litigation, and c) the profits they get once they make Moto profitable again.

2) Google should turn Moto into a hardware company that sets an example for other OEM's. Kind of like the Nexus series, but departing from AOSP to add functionality without causing problems for app developers. OEM's might take offense if Eric Schmidt keeps saying that Motorola makes the best hardware, but I think a completely Google-run manufacturer and the other OHA members can coexist peaceably, at least long enough for Motorola to become profitable again.

3) Moto needs to make dev editions of all ALL the phones it releases with encrypted bootloaders (encrypted to keep carriers like Verizon happy). Normal people don't care about that, but they do ask their techie friends' advice. If they can get the good will of the techie population while still making user-friendly products, they can succeed.

4) It would be nice if Motorola made phones for T-Mobile USA. It's not support important, but T-Mobile and Google have a good history together (see T-Mobile G1, G2, and Nexus S). Yet Motorola doesn't make a single phone for T-Mobile. Again, this is more of a "don't be evil" step rather than a super profitable one.

Google should have shifted their Nexus devices from Samsung to Motorola. I'm sure consumers would be much more satisfied with the hardware specs compared to what Samsung has offered on the Nexus line.

Motorola used to be the king of mobile at one point and I think with the infusion of Android and going pure stock they could regain a lot of their former glory. If only Google would get their head out of their *** and not leave Motorola as a separate entity.

OG Droids for everyone!!!! Unlocked bootloader, newsest JB installation with future OS to come and "flagship" quality hardware on at least 1 phone on ALL carriers not just "Verizon"!!! Hmmm...that sounds easy, simple and should keep everyone happy.

Considering that so far the new Motorola cant keep its promises (canceled Atrix/Photon ICS, delayed Bionic ICS, still producing way too many phones when they said they'd cut back to stop future delays and cancelations of updates) I think they should just close shop and use the patents to protect Android.

Motorola's already done enough damage to their reputation that power users would be insane to recommend them to family and friends. That's not something that'll get corrected very fast. So unless Google wants to needlessly burn money over the next few years, they should stop while they're ahead.

I have got to agree with you. Though there is another way. Google can admit that they made a mistake and turn around and quickly put JB on these devices. Look how quickly they got JB out on the Xoom (which has very similar specs). If they did that on these phones they would restore consumer confidence.

So Google and MotoMob: You have a choice to make. Either throw in the towel and admit that you can't support your phones. Or show us how impressively you can support them. Show us how great JB is and why everyone should want Android and Moto products.

Or don't... :-(

Imagine a world of Apple iPhones, co-existing with Huawei, Pantechs branded iOS devices, it would be such market domination that the Android ecosystem wouldn't have the chance to even begin life.
Google has exactly the opportunity to bring life to that scenario, by turning Motorola into their division that makes only Nexus devices - your pure Android experience brand, without MotoBlur or any other tack-on skins or what have you to muddy the water. Make Motorola the Skunk Work/Black Ops of Google's Android world! Of course, they will all be unlocked and sold only through Play Store.
Motorola has a history of designing quite stunning phones, seems like it's always the software that hobbles them, and that endless cycle of updates for so many devices. So release them from that shackle and let them concentrate on designing devices that will be showcase of the latest Android OS.
At the same time let your Samsung, HTC, LG etc etc make devices for the different carriers all with their own add-on skins and bloatware for those who doesn't know the difference.