UPDATED 01:00 EDT / AUGUST 31 2015

NEWS

Lenovo to restructure mobile business around Motorola

It’s no secret that China’s Lenovo Group Ltd. has big ambitions to become a leader in mobile, as its done so in the PC business. But that didn’t stop eyebrows being raised when it made the decision to purchase Motorola Mobility Holdings Inc., the failing smartphone business owned by search engine giant Google, for a whopping $2.91 billion in 2014.

Once one of the world’s most recognizable mobile phone companies, Motorola has been bleeding cash for years, and even under Google’s stewardship it saw several consecutive quarterly losses.

Now, Lenovo, who’s own smartphone brand has lost market share in recent quarters, has said it’s planning to reorganizing its mobile operations and shift responsibility for its smartphone business to the Motorola Mobility division.

The move is a curious one. At the time of the acquisition, Lenovo promised to turn Motorola’s business around and drive a profit within four to six quarters, as part of an ambitious plan that visioned selling 100 hundred million mobile devices in 2014. The idea was to leverage Motorola’s still solid position in the U.S., together with Lenovo’s growth in China and emerging markets like India, but unfortunately for the company that didn’t happen.

What did happen is that Motorola saw shipments fall by 31 percent in the last year to just 5.9 million units. Lenovo’s own smartphone brand did pick up a few more sales – 2.3 percent growth in the last year, totalling 16.2 million units – but it was still way off the 100 million mark. Even worse, Lenovo’s global market share slipped from 5.2 percent to 4.7 percent.

Now, Lenovo is launching another ambitious plan – it’s going to merge its Lenovo smartphone brand with Motorola, with all mobile operations to fall under the latter brand, reports The VAR Guy. Meanwhile, Lenovo Mobile will be slowly wound down and eventually shuttered.

The goal is obvious – Lenovo wants to return Motorola to profitability within six months to a year, under the helm of former company president Rick Osterloh.

“Effective immediately, Rick Osterloh, formerly president, Motorola, will be the leader of the combined global smartphone business unit,” Lenovo told NDTV Gadgets in a statement. Motorola will handle all product design, development and manufacturing, Lenovo said.

Lenovo might sound confident – it always does – but there’s no disguising the tough task ahead. As Doug Young commented in Forbes, Motorola may have been cool once upon a time with its cutting-edge designs, but much like BlackBerry, it’s a brand that’s lost its edge. And as for the ‘plan’ itself, Lenovo hans’t said a word on how it actually proposes to turn the company around. If anything, the plan is more of a cost-cutting excerise than anything else.

“Those glory days are a distant memory now, and Lenovo’s ongoing attempts to resuscitate the brand are showing no signs of gaining momentum,” Young wrote.

Image credit: Bfishadow via flickr.com

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