Android and massive cost cutting could be the saving of Motorola

Motorola hasn’t had a great couple of years. Dwindling relevance and sales caused more than just a few people to write the company off. At Mobile World Congress earlier this year I heard the company brushed aside as “past it”. But with a massive effort this year, including staggering cost-cutting and a huge drive behind Android, the company may have saved itself.

What was the problem?

Motorola’s problems were many and varied. But the biggest one was that people simply weren’t buying Motorola phones. And as a mobile device manufacturer, yeah, you could call that a problem. Motorola wasn’t keeping abreast of developments in the smartphone market, without a hit device since the RAZR.

Then it made some changes.

At the end of July this year, Motorola surprised a lot of observers by posting a net profit for Q2 2009. At the time, this could mostly be credited to extremely heavy-handed cost cutting measures, including the axing of over 8,000 employees. But this was a stop-gap measure, a way to quickly save some money. The company still needed to do something to reverse it’s fortunes or all the cost cutting in the world wouldn’t help.

Enter Sanjay Jha. Poached from Qualcomm, the electronic design and engineering guru was appointed the CEO of Motorola Mobile Devices, as well as becoming Co-CEO for Motorola in general and getting a position on the board of directors. It is Jha who has spearheaded the new dedication of Motorola to Android. And that seems to have spurred the company into a period of aggressive energy that hasn’t been seen from it in a long time.

In early September, Motorola released the Cliq. Despite being a fairly standard smartphone, it was one of the most exciting things to have come from the company in some time… which isn’t saying much. Fast forward to this week, and we’re looking at the Droid. With a sexy advertising campaign and genuine buzz, the Droid looks like it might be the device that revives the flagging manufacturer. And the numbers are there to support that – Motorola has posted an overall profit of $12 million for Q3 2009. Which is a hell of a lot better than the $300 million loss during Q3 last year. It has also seen an 11% rise in the value of it’s shares.

What we think?

So things are looking better for Motorola, but they are by no means in the clear. With the Cliq and the Droid, it has two decent devices on the market as the holiday season begins. Yes, there is buzz. Yes, there is excitement. But until there a lot of happy consumers out there with Motorola Androids in their pockets, the company will be on unsteady ground. If the current crop of Androids sells well, then the 20 or so that Sanhay Jha claims it will be releasing next year could be the saving of the company. But it is great to see at least some hope for a company that was looking pretty much doomed at the start of this year.