So much for that: Motorola Mobility to close Texas smartphone factory

12 years ago

“Google’s Motorola Mobility handset unit has announced it will shutter its North Texas factory, by the end of this year, barely a year after it opened with much fanfare as the first smartphone factory in the U.S.,” Emily Schmall reports for The Associated Press.

“Sales of its flagship phone, the Moto X, have been weak and the costs of running the plant too high to keep operations going, Motorola Mobility spokesman Will Moss said,” Schmall reports. “Even though the concept of the smartphone was pioneered in the U.S. and many phones have been designed here, the vast majority of phones are assembled in Asia. The Fort Worth factory has allowed Google to stamp the phone with “Made in the U.S.,” although assembly is just the last step in the manufacturing process, and accounts for relatively little of the cost of a smartphone. The cost largely lies in the chips, battery and display, most of which come from Asian factories.”

Schmall reports, “The Fort Worth factory employs about 700 workers who assemble the Moto X smartphones for the U.S. market, Moss said. He declined to comment on whether Motorola would retain the workers. Google bought cellphone pioneer Motorola Mobility for $12.4 billion in 2012. Originally retailing the Moto X for $600, amid flagging sales, Google dropped the price to $399. Still, only a fraction of the units were sold compared to the Apple iPhone.”

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“At its peak late last year, the plant employed as many as 3,800 people, most on behalf of contract manufacturer Flextronics International Ltd.,” Rolfe Winkler reports for The Wall Street Journal. “Market researcher Strategy Analytics said Motorola sold 900,000 Moto X smartphones world-wide in the first quarter. By comparison, Apple Inc. sold 26 million units of its newest iPhone 5S in the same period. ‘What we found was that the North American market was exceptionally tough,’ Motorola President Rick Osterloh said in an interview. The Moto X sold for $600, without a contract, when it went on sale in September, though Google subsequently lowered the price to $399. Apple’s latest iPhone sells for $650 without a contract on the website of AT&T Wireless.”

“The plant-closing announcement comes four months after Google said it agreed to sell the Motorola handset business to Chinese computer maker Lenovo Group Ltd. for $2.9 billion. That deal is expected to close later this year, according to the Motorola spokesman. Mr. Osterloh said the decision to close the plant was independent of the planned sal,” Winkler reports. “The spokesman said Motorola will continue making the Moto X in China and Brazil, among other places.”

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MacDailyNews Take: Ignominious failure.