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Rolling away

By Fang Yunyu Source:Global Times Published: 2013-6-5 20:48:01

 

Motorola employees, holding banners saying
Motorola employees, holding banners saying "fight against violent layoffs and ask for equal consultation," protest in front of the company's Beijing office last year. Photo: CFP

 

Long before Apple's iPhone became a must-have gadget, Motorola was the most iconic mobile phone brand in China.

But the company has fallen on hard times in recent years, and huge cost-cutting programs have led some to suggest that the firm may even disappear from the domestic market.

According to data from Analysys International, 75.28 million smartphones were sold during the first quarter in China, an increase of 142 percent over a year earlier. Samsung ranked top in the smartphone market, with a share of 17.3 percent, while Motorola was not even in the top 10.

But as difficult as the current situation is, the US-based company has said it is still seeking new opportunities in the handset market.

New technology

Dennis Woodside, CEO of Motorola Mobility, disclosed at the end of last month that the company is about to unveil the Motorola X Phone, a low-cost US-made device.

Woodside said the new handset range is intended to challenge Apple's iPhone and the Samsung Galaxy.

Wang Jun, an industry analyst at Beijing-based consultancy Analysys International, told the Global Times Tuesday that the company's future may not be as grim as many people think.

"If the new phone targets consumers effectively, it will have a market," said Wang.

Even though Motorola appears to be at a disadvantage, given the dominance of Apple and Samsung, a small group of consumers can still support a company's future, Wang noted.

At the All Things Digital Conference held in the US last week, Regina Dugan, senior vice president of Motorola Mobility, showed off the company's new device authentication technology, involving tattoos and ingestible pills, to fix "the mechanical mismatch between humans and electronics."

"This isn't stuff that is going to ship anytime soon. But it is a sign of the new boldness inside Motorola," explained Woodside.

"Apparently, Motorola is quite influenced now by its parent company Google, which is focused on innovative futuristic products," said Wang, adding that strengthening research and development of intelligent products could provide a good path for Motorola's future.   

But the current program of layoffs has made people wonder whether the company can really live up to its ambitions.

Massive cuts coming

According to a report last week by telecommunications industry website ccidcom.com, Motorola Mobility China is considering cutting 800 jobs in China, with the sales team also on the reduction list.

The report said the company's China CEO Meng Pu, who has already overseen more than 1,000 layoffs at the company, has recently resigned as well.

Kevin Si, public relations manager at Motorola, told the Global Times on May 28 that the layoff was part of "our headquarters' global layoff decision," but refused to disclose further information about it.

Si said China was still "a very important market" for the company, and Motorola will continue to do business here.

The mobile phone maker announced in March a reduction of 10 percent of the company's workforce worldwide, or 1,200 jobs, as part of plans to cut costs and address a slump in sales. But it did not reveal how many employees would be laid off in China.

"The latest layoff clearly demonstrates that Google Inc's purchase of the company is aimed at acquiring Motorola's mobile intellectual property rights and core technology, not the company itself," Wang said.

Hello and goodbye

Motorola was once one of the world's most innovative mobile phone producers.

In the 1990s, Motorola's first brick-like mobile phones became available in the Chinese mainland.

At that time, the gadgets were considered luxury products. In 1992, one mobile phone cost as much as 30,000 yuan ($3,614 at that time), at a time when Chinese people's annual salary was 2,711 yuan on average.

But by 1998, Motorola had been overtaken by Nokia as the country's biggest seller of mobile phones.

After suffering massive losses, the company in 2011 was split into two entities - Motorola Mobility and Motorola Solutions - so as to separate the loss-making handset unit from the more successful enterprise communications and public safety business.

In May 2012, Google Inc acquired Motorola Mobility for $12.5 billion.

"Our acquisition of Motorola will increase competition by strengthening Google's patent portfolio, which will enable us to better protect the Android (operating system) from anti-competitive threats from Microsoft, Apple and other companies," read a statement from Google CEO Larry Page at the time.

Page said he looked forward to "welcoming Motorolans to our family of Googlers."

But within three months, Google announced a layoff of 4,000 "Motorolans" globally, including some 1,000 employees in China.

When Motorola's board voted in favor of the company's sale, it demonstrated that "the management was no longer interested in conducting a long-term mobile phone business," said Li Yi, secretary-general of the China Mobile Internet Industry Alliance.

Li said that Google's purchase was intended to hedge against patent risks posed by other technology companies, such as Apple and Microsoft.

Google's financial report for the first quarter this year showed that Motorola's losses amounted to $271 million, following a loss in the previous quarter of $353 million.

"Google is eyeing other more innovative products," said Li.

The US search engine company is currently working on advanced projects, including developing driverless cars and establishing wireless networks in developing countries by using high-altitude balloons.

"Google's interest is not in mobile phone handset production, as the company can easily find partners to do that," said Li, noting that Motorola mobile phones may soon disappear from the China market.

Wang said he expected the number of products from Motorola would continue to decline, as the continuous job cuts will affect the company's ability to conduct research, development and production.

"But the brand of Motorola still has some value. If Google wants, I think some Chinese companies, like Lenovo and Huawei, will be very interested in buying the brand, as Chinese companies are relatively weak in building world-level famous brands," said Li.

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