Jeremy Hobson: Google announced this morning it will lay off 4,000 people. They're all employees of Motorola Mobility, which Google recently bought. The layoffs account for 20 percent of Motorola Mobility's workforce.
For more on this, let's bring in Henry Blodget. He's CEO of Business Insider. Good morning.
Henry Blodget: Good morning.
Hobson: So what is Google up to here?
Blodget: So Google is finally taking steps to restructure Motorola, which it bought last year. This was very much expected although these are very deep cuts so I think they will cause some consternation. When Google announced it was buying Motorola many people said: "Well, this is just for the patents."
It became clear over the process of closing the deal that Google actually wants to make smartphones and tablets and compete directly with Apple on integrated devices. As soon as that became clear, the next conclusion was that Google going to have to restructure Motorola and that’s what they’re doing.
Hobson: But what are about Motorola, though? This is a 84 year old company, it was a leader in the world of smartphones and even as recently as 2004 it came out with the famous “Razr” which was a really an impressive phone at the time.
Blodget: That’s right. Unfortunately, the smartphone business has moved so fast in the last 5 to 6 years that a lot of old line companies have been completely blindsided. You look at Nokia, which was the global leader until just a few years ago; Research in Motion, which was the smartphone leader, has been completely destroyed; and Motorola has also been leap frogged.
This is a company that has some good products that people like, very much an American success story. But they have been leap frogged by the Iphone and that has put the company on their heels. I think Google’s hope is that they’ll be able to use their software with Motorola’s design process and come up with phones that are directly competitive with the Iphone and some of the Samsung phones.
Hobson: Henry Blodget, CEO at Business Insider, thanks a lot.
Blodget: Thank you.