Lenovo Announces Motorola Layoffs, Will Not Abandon Modular Handsets

On March 10, industry sources said that Lenovo Group’s Motorola Mobile may lay off half of its Chicago headquarters employees. This clouds the future of its modular smartphone project.

SEE ALSO: Yang Yuanqing: Lenovo Carries on Intelligent Reform in 2018

Fast Company reported that Lenovo confirmed the Motorola Mobile layoffs without disclosing a specific number of layoffs, but rejected the notion that the number of employees in Motorola’s headquarters in Chicago will be cut by half. Lenovo Group also said it will not give up on its modular smartphone.

Motorola’s Chicago headquarters team is responsible for designing and developing the Moto Z modular smartphone. Lenovo Group also said that the modular smartphone project will continue.

Lenovo’s smartphone business has been in deficit for the past four years, since Lenovo purchased Motorola Mobile for $2.9 billion in 2014. Motorola’s less-efficient business has become a burden, and the merger and reorganization did not go smoothly.

Reports from many market research companies showed that after the Motorola takeover, Lenovo Group’s global smartphone shares have not increased, but rather have declined. Now, their shares are dropping even lower and out of the world’s top five ranks. Lenovo also no longer announces specific smartphone sales.

In the Chinese market, Lenovo Group had a controversial reorganization. It suddenly closed ZUK, a cost-effective brand sold online. Allegedly, the Motorola team was responsible for the Lenovo’s Chinese market.

Lenovo’s market share has been shown to be zero percent in China (sales are not necessarily zero, but percentages are too low to be recognized), according to a report published by a technology market research firm.

Touted as a breakthrough in smartphone business, Motorola launched a modular smartphone Moto Z in 2016, allowing users to buy and connect separate modules, such as battery modules and camera modules.

In February, Lenovo announced that it had sold five million Moto Z units around the world, while the activation of various mobile modules had increased by two-thirds.

The modular smartphone is an innovative business with a certain risk. Prior to Lenovo, Google and LG Electronics had all abandoned modular smartphone projects due to poor sales and project difficulty.

Some people think that modularity is the wrong direction for smartphone development, since smartphones are different from PCs. Smartphone development trends toward ultra-light and ultra-thinness, with higher product integration. It is difficult to replace modules flexibly, or maintain and dismantle the handsets.

Lenovo Group’s modular smartphone was positioned as a high-end high-priced product. Some independent modules are priced around $100, equivalent to an entry-level Android phone. The high price tag has damped the attractiveness of Lenovo’s modular smartphone.

After the Motorola business layoff, whether Lenovo Group will have other mobile phone restructuring actions will be worth paying attention to.

After Google sold Motorola, it spent $1.1 billion at the beginning of this year to acquire Taiwanese smartphone manufacturer HTC’s foundry business. Gaining 2,000 engineers, Google’s interest in research and development of mobile phones is growing.