Google's plan to cut 20% of the workforce at its Motorola Mobility unit has reignited internal fears that the Internet giant primarily had its eye on 17,000 Motorola patents when it acquired the mobile device maker in May.
Google earlier this month announced plans to close or consolidate about one-third of Motorola Mobility's 90 facilities, cut 4,000 jobs and simplify its product portfolio by shifting from feature phones to more "innovative and profitable" devices.
The 4,000 job cuts are "an earthquake up and down the hallways of Motorola Mobility," said Jeff Kagan, an independent analyst. "Google has never laid off workers like this before, so [there's] an unsettling feeling in the hallways of Google. Everyone at Motorola is asking [whether Google wants only the patents] and is fearing the answer."
A rich store of patents has become a kind of insurance policy for companies in the mobile device market, where patent disputes are increasingly common. As evidence of this state of affairs, analysts cite recent patent acquisitions by Google, Apple and Facebook and point to the closely watched legal battle between Samsung and Apple -- the two companies that dominate the mobile device market.
It remains unclear whether Google bought Motorola primarily to use its broad portfolio of patents, some of which date back to the creation of radio communications, as ammunition in patent disputes with the likes of Apple and other mobile device makers, analysts say.
In fact, just days after announcing the layoffs, Google filed the latest of multiple claims against Apple with the U.S. International Trade Commission, this time asserting that various popular devices, including the iPhone, the iPad and the iPod Touch, infringe on Motorola Mobility patents related to email notifications, location reminders and media players.
Google, meanwhile, hasn't offered details of its plans for Motorola Mobility, though a source close to the company, who asked not to be identified, described the $12.5 billion acquisition as a long-term bet and a commitment to the unit's smartphones and tablets,
In documents filed with the U.S. Securities and Exchange Commission, Google said that the job cuts and other moves are "designed to return Motorola's mobile devices to profitability after it lost money in 14 of the last 16 quarters."
Jack Gold, an analyst at J.Gold Associates, said that while Google has long coveted the Motorola patents, it probably is also looking to utilize the engineering expertise and mobile device knowledge of the unit's workforce.
"I don't think this is the end of Motorola, but I do expect a scaled-back presence with fewer phone models and a heavy concentration on the higher end of the market," Gold said. "Just like Nokia and RIM, Motorola is being forced to concentrate on its core growth areas and not [on] the low end, where it can't win."
Carolina Milanesi, an analyst at Gartner, said the layoffs might not be a sign that Google plans to keep patents and drop workers, but the action does suggest a narrowing of focus at Motorola Mobility. She said Google could succeed in the smartphone and tablet business by bundling its own software and services with Motorola Mobility devices. "Making money out of the hardware is a game that only very few can succeed at nowadays," Milanesi noted.
John Ribeiro and Marc Ferranti of the IDG News Service contributed to this story.
This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.
Read more about management in Computerworld's Management Topic Center.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.