Motorola Mobility’s market share around the globe seems to be receding as the smartphones company takes its first step towards pulling out of South Korea. The move, according to a leaked internal memo, has been revealed to be part of a continued global restructuring effort by Google, which bought Motorola earlier this year for around $12.5 billion.
The move very closely follows similar moves made by smartphone maker HTC and web portal Yahoo, two companies that actively made the decision to pull out after struggling to flourish and build a strong customer base in South Korea. Both the companies decided to streamline their operations and cut their losses, the former having suffered low handset sales and the latter having succumbed to the overwhelming competition.
As is expected, the fallout of such a huge decision is bound to have severe repercussions for the workers at Motorola’s South Korean operation. Nearly 500 employees are expected to lose their jobs, but have been promised to receive compensatory redundancy packages. Amongst Motorola’s research and development staff in Korea, who will also be losing their jobs, about 10% of the workforce will be offered relocation packages. The company will also leave two of their business units running but will effectively stop all smartphones sales, be it new devices or leftover devices.
While it is speculated that Motorola Mobility has pulled out to cut their losses in the difficult Korean market, as Yahoo and HTC did, it has also been speculated that Google’s sole intention of buying out Motorola was solely to acquire more than 17000 patents held by the latter. The worth of these patents is due to be evaluated in court and will thus determine whether Google’s purchase was worth the sizable price-tag or not. The move could be seen as Google’s move to exploit the company’s financial crisis by shrinking Motorola’s assets in the global market and increasing its profitability as a direct result.
Motorola Mobility has seen some gradually difficult times in the highly competitive global smartphones market and this move by Google could have either spared it a slow death in the South Korean market or could have simply been part of its plan to absorb Motorola’s company base and consolidate its own firm hold over the industry. Motorola has already seen around 4000 employees outside of the US driven to redundancy, all of its international websites shut down, and roughly 30 out of its 90 offices closed to salvage any chance of retaining even a shred of profitability to keep the company afloat.
