04
Oct
motorola-verizon-droid

Reuters, showing its apparent inability to view anything involving spending money in a positive light, is reporting this morning that Google has revised its reorg (read: firing) costs for Motorola to $340 million this quarter, up from an initial estimate of $275 million. The article goes on to describe this "restructuring headache" - you know, the one Google bought knowing 100% full well it is was getting and had time to prepare for literally a year in advance? Yeah, that "headache."

It seems no one bothered telling this Reuters writer that the notion Google bought Motorola simply for its patents is now considered a tad naïve, either. I think it's safe to say that basically nobody is concerned how much it's costing Google to turn Motorola into a relevant player in the smartphone market again - especially if that cost will eventually result in significantly decreased overhead. Their stock price sure seems to be dealing with this news surprisingly well.

As you may recall, Google is closing many of Motorola's international offices (most of them in Asia), and slashing 20% of its work force. We also know it's planning to spin off the set top box and modem division - an intelligent move that will likely generate quite a bit of cash.

Google doesn't want to get into a business it doesn't understand. Google doesn't do dumbphones (a big part of Moto's old business), and it probably has no interest in becoming a major set top box maker (Kansas City fiber experiment aside). Dennis Woodside has made this much clear: the new Motorola is about smartphones, and not much else. If anything, we should be applauding Google for taking an aggressive approach to cutting the fat that we all know has plagued Motorola and kept its focus in too many places at once.

Reuters

David Ruddock
David's phone is whatever is currently sitting on his desk. He is an avid writer, and enjoys playing devil's advocate in editorials, and reviewing the latest phones and gadgets. He also doesn't usually write such boring sentences.

  • Rohan Blake

    awesome

  • moelsen8

    you had me at the picture of the droid.

  • br_hermon

    The only thing I've always wondered is: Why would Moto sell off their settop box division while they continue to promote Google TV and create products like the Nexus Q? Seems the 3 of them could mutually benefit from one another.

    Unless Google wants to continue being solely a software developer and leave the hardware to other companies to ensure Android get on as many devices as possible (think the new [unannounced] Nexus program strategy).

    • http://www.facebook.com/rob.mahon Robert Mahon

      Aye, I too was curious on why they'd dump a division that, as noted in the article, could be used very well in the Kansas Fiber roll out. Creating their own tv boxes, to capture yet more information about viewing habits for more accurate ads, and even display targeted ads for subscribers... very strange it's a market they don't want to be involved with, unless as you say, they'd prefer others to make the hardware (and perhaps deals along these lines were made with bigger players like Samsung/Sony to get GoogleTV rolled out on more of their devices..
      But this could have been a stealth infiltration of GoogleTV, every settop box, hidden Android guts to power apps on TV's? Very, very strange this is being sold off. I don't understand why at this time.

      • Asphyx

        I'm curious as well since I thought the Set Top Box was the biggest asset for future growth.
        But it does seem to make some sense when you realize that the STB market is largely controlled by the cable providers who are not really all that interested in you leaving the TV for web content without them getting a fee for it. It's almost the same issue Google has now with the Wireless carriers. Google wants to have control over the hardware and that has been problematical with the carrier and would be even worse to deal with in regard to the MSOs that buy those boxes.
        Many are switching to Cisco systems these days so it may just be that Google would prefer to focus on complimentary boxes (like GTV) instead of having to deal with the MSO headaches to try and integrate GTV into the cable company boxes.

    • http://twitter.com/mcmedellin Mateo Medellin

      Guys, spin-off is not the same as divesting. Technically what they will be doing is separating the topbox and the cellphone divisions into different businesses. They will still be making money of the topboxes, i.e. Google TV. As a matter of fact, they will probably be majority shareholders of the topbox business. If they said they were going to divest, then they would completely get rid of that division and stop making money from it.

  • aku

    I think they will probably lose a lot of revenue by letting go of set top boxes - every single STB I have owned in my life has been a motorolla....

  • http://twitter.com/Lehjr1 Leon

    Motorola has had far less fans since the ICS update cancellations after months of stringing people along.

  • Freak4Dell

    Getting rid of set top boxes is not an intelligent move. Motorola dominated that market, and Google could have jumped on that domination by adding Google TV. It's actually a very stupid move to get rid of that division.

    Modems, I'll give you. I don't know of anything that Google could really do with that.

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