Google’s $12.5 billion purchase of Motorola Mobility was completed earlier this year, in a move that put Moto’s 17,500 mobile related patents squarely in Google and Android’s back pocket. There was much speculation when the deal was announced as to just what Google would do with the hardware division of the company with a number of analysts even speculating they would keep the patents and sell off the rest.

However, Google has committed to keeping the smartphone division while agreeing to run the company as a separate entity to eliminate anti competitive claims from other Android manufacturers. The first move was to put Googler Dennis Woodside at the helm as CEO after he oversaw the acquisition. The next major move just announced involves a major restructuring of the company as a whole.

Google has initiated a downsizing that will amount to 20% of the companies 20,000 employees being laid off, a consolidation of 1/3 of their 90 facilities, while also replacing 40% of the companies executives with their own. These changes are all part of a fundamental paradigm shift for Motorola Mobility that will see a 50% cut in the supply chain and components due to the closing of the feature phone operations and a sole focus on high-end, high-margin Android smartphones.

The goal is to return Moto to profitably after 14/16 of the previous quarters resulting in losses. The new product team will now be nimble, efficient, and run like startup… who has 16,000 workers. Moto looks to the same path as HTC with their One line, releasing only a few high-end handsets a year, phones that can go head to head with the likes of Samsung’s Galaxy S III and Apple’s iPhone. To play with the big boys Motorola needs to design with innovation as a key factor and an equally important emphasis on seamless hardware and software integration.

I look forward to the new Motorola Mobility, one that pushes smartphones to new levels — with a user experience that integrates hardware and software on levels that only Apple has been able to provide so far. While it will be run as a separate entity, with the new leadership all coming from Google you have to foresee flagship Android devices that are the epitome of what the Android team envisions. This is Google’s opportunity to take on the venerable iPhone head to head. By this time next year the smartphone market leaders Apple and Samsung who rake in 90% of the profit from the industry should see a a rejuvenated competitor that’s ready to go toe to toe and blow for blow for the title of best smartphone.

[via Read Write Web]