Nestled in Lenovo's latest earnings report were disappointing figures for both their own brand of smartphones and Motorola, which was acquired late last year. The Chinese company's response is to do some fairly large-scale restructuring, handing over basically all aspects of Lenovo smartphones to Motorola with the possible exception of marketing. Motorola will continue to develop, make, and market their own line that most Westerners are familiar with.
In light of the earnings figures, it might be surprising that Motorola is the part of the larger company that is rewarded with more responsibility. Lenovo's own brand of smartphones posted a sales increase of 2.3% compared to a year ago as they shipped 16.2 million units. Of concern to Lenovo is that smartphone market share fell 0.5 percentage points to 4.7%, though they still kept their spot in fifth place worldwide.
Motorola, on the other hand, saw a massive 31% drop in smartphone shipments to 5.9 million units. Lenovo feels that economic issues in Brazil, a large market that Motorola typically does very well in, explains some of those sales problems and should clear up in the future. Other explanations include supply problems and a fixed cost structure which could become a positive if sales pick up. Management claims they think Motorola will return to profitability within a year and potentially as soon as 6 months from now.
Still, citing worries about their declining market share and likely following through with plans that drove the acquisition in the first place, the company says Motorola will be used to "design, develop and manufacture smartphone products" for Lenovo. As it is explained, it appears these phones will still be branded as Lenovo, but will become Motorola creations.
The big question going forward is whether Lenovo smartphones will be recognizable Motorola designs but with a different logo or if the change will allow Lenovo to keep its own design language. While Android Police readers would probably welcome more Moto in their Lenovo, it's worth pointing out that Lenovo sold nearly three times as many smartphones last year.
I would speculate that Lenovo smartphones will begin to look a lot more like Motorola phones. Among the "restructuring costs" outlined in the report is $300 million earmarked for clearing out smartphone inventory, which sounds like something they would prioritize if they want to make wholesale changes to the product lineup.
Another product of this restructuring is layoffs for 3,200 workers, 5% of Lenovo's total workforce and 10% of their non-manufacturing workforce. All of the layoffs are non-manufacturing workers. While Lenovo isn't saying exactly who they are getting rid of, chances are their smartphone division is facing cuts.