Now here’s some interesting news: Google is downsizing – the first time it’s ever done so.
More precisely, it’s cutting ~20% of the workforce of its Motorola subsidiary, which it acquired earlier this year. And most of those job cuts are happening in the United States.
While Google is known for being a money machine, the fate of its Motorola subsidiary has been far less stellar. In fact, Motorola hasn’t turned a profit in 14 of its last 16 quarters.
Motorola proves how dicey the world of hardware is compared to the search advertising realm where Google makes more than 90% of its revenues and profits.
The fact is, despite Motorola’s strong lineup of smartphone models like the Droid RAZR and RAZR HD, it’s just very difficult to turn a profit on the hardware side — especially in the entry-level mass market where Motorola has also attempted to compete.
But more to the point: Motorola’s subsidiary is one industry sector where Google isn’t in the driver’s seat. By contrast, it’s easy to be a veritable profit machine when you control 65%+ of the billions that make up the search marketing world.
Recently, it’s clear that Google has been sniffing around to add other products and services and not be so dependent on one silver-bullet business category.
The big question is … what does Motorola’s experience portend for future forays by Google into new segments where the company doesn’t command an overwhelming advantage? Or, will it spend more of its capital on search-related acquisitions, like the just-announced absorption of Frommer’s travel-related media properties?
Welcome to the real-world competition, Google.