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Analyst: Motorola Quitting Handset Business

I've heard my fair share of wacky predictions from analysts. Though I've been hard on Motorola this past year, I think Nomura International analyst Richard Windsor is a little off the mark when he suggested that Motorola might ditch its mobile handset business rather than attempt to resurrect it. But can Motorola actually turn itself around?

In a note published today, Windsor told his clients that Motorola might "exit the handset business and concentrate on becoming an enterprise and government company." I don't doubt that Motorola's enterprise division (formerly Symbol Technologies) is performing well. Symbol was all about enterprise mobility and made quality hardware for a wide range of enterprise needs. Next time you're at Home Depot, be sure to check out the scanner the cashier uses to scan your purchase. Chances are it's from Symbol.

Windsor went on to say that Chinese vendors may be interested in buying Motorola's ailing handset business. But he also said the Chinese vendors interested in Motorola's handset business don't have much of an idea of how to fix it. Ha! That says something. He believes the root of the problems are platform and software, not hardware. This is where I think he is flat-out wrong.

Of all the phones I've tested, Motorola handsets outperform all others in one key metric: call quality. Motorola phones know their roots, and call quality is generally excellent across the board. Sure, some of the phones might have software and platform bugs, but those are just as much a responsibility of the network operators as it is Motorola's. It wouldn't hurt Motorola to stand firm and wrest some platform control back from the network operators.

(Psst, Motorola, here's a tip: Speed up your implementation of Linux-based handsets. Oh, and getting that sweet UIQ platform onto your devices wouldn't be a bad idea, either. Lastly, diversify! You can't make a business work if you rely on the success of just one device. Make a wide portfolio of devices that appeal to different segments rather than one phone for everyone -- cough, cough, Razr, cough -- and you'll start winning back sales.)

Windsor fails to point at the heart of the real issue, though, which is management. Motorola needs to restructure its management system from top to bottom if it really wants to turn itself around. It also needs to re-think how it sells and markets its phones. I truly wonder if new CEO Greg Brown has the stomach to turn the organization on its head.

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