Menu
Lenovo's Motorola business to produce phones at quicker pace, less cost

Lenovo's Motorola business to produce phones at quicker pace, less cost

Lenovo announced it would cut 3,200 jobs in its businesses

Motorola wants to offer a pure Android experience with its phones in China.

Motorola wants to offer a pure Android experience with its phones in China.

In the wake of lackluster earnings, Lenovo said it is working towards pumping out products faster from its newly acquired Motorola Mobility division.

Lenovo wants the Motorola team to shorten its product development time, CEO Yang Yuanqing said in an earnings conference call Thursday. "By the end of the life cycle the product is not competitive, particularly the Moto G, the Moto X," he said.

Yang wants the company to update its smartphones and add new models every six months. "In the future we will improve our product development cycle. So in every moment our product will be competitive," he said.

Following a streamlining of the business, Lenovo will also create a simpler handset portfolio, with fewer models.

On Thursday, the Chinese company announced it would cut 3,200 jobs and restructure its mobile business, with the aim of creating a leaner operation that can better compete.

Motorola Mobility, which Lenovo acquired last year, will be among the business groups facing employee layoffs, company executives said. Lenovo paid US$2.9 billion for Motorola, but the business has been costly to run, and is still posting losses.

The company has vowed to turn around the Motorola operation in the next two to three quarters.

During the earnings call, Yang said the Motorola business takes $2 billion to run. However, Lenovo's own existing smartphone business costs only $400 million in expenses, yet ships about the same quantity of products.

"So that is way too high," Yang said of Motorola's business costs. "We think we can save $850 million after the restructuring."

Lenovo is making the changes as its faces tougher competition in the handset market. During the second quarter, its smartphone shipments grew 2.3 percent year over year, but its overall market share fell. Lenovo's rivals in China, including Xiaomi and Huawei, posted 29 and 48 percent growth, respectively, according to research firm IDC.

But even with the cost cutting, Lenovo is confident the restructuring will lead to robust smartphone growth over time. Yang said he wants his company to become the third largest smartphone vendor behind Samsung and Apple.

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags business issuesconsumer electronicssmartphonesAndroidMotorola MobilityLenovorestructuring

Slideshows

Meet the leading HP partners in New Zealand...

Meet the leading HP partners in New Zealand...

HP has recognised its top performing partners in New Zealand at the second annual 2016 HP Partner Awards, held at a glittering bash in Auckland. The HP Partner Awards recognises and celebrates excellence, growth, consistency and engagement of its top partners. This year also saw the addition of several new categories, resulting in 11 companies winning across 11 award categories.

Meet the leading HP partners in New Zealand...
Channel comes together as Ingram Micro Showcase hits Auckland

Channel comes together as Ingram Micro Showcase hits Auckland

Ingram Micro outlined its core focuses for 2017 at Showcase in Auckland, bringing together the channel for a day of engaging keynotes, compelling breakout sessions and new technologies.

Channel comes together as Ingram Micro Showcase hits Auckland
Show Comments