Motorola's Breakup Provides Opportunities For Competitors - InformationWeek
IoT
IoT
Infrastructure
News
3/26/2008
12:59 PM
50%
50%
RELATED EVENTS
Dun & Bradstreet CAO Discusses Her Roll & The Skills Needed to Do the Job
Jul 26, 2017
LWhat does a chief analytics officer do each day? To help us answer that question we welcome Dun & ...Read More>>

Motorola's Breakup Provides Opportunities For Competitors

One of the ripple effects of the Motorola announcement likely will be the continued ascendance of Asian device makers like HTC and UTStarcom.

Motorola's divide-to-conquer strategy, announced Wednesday by CEO Greg Brown, may give the beleaguered handset maker the opportunity to right its leaking ship.

What it doesn't do is change the fundamentals the iconic Schaumburg, Ill., communications company faces in an increasingly globalized and competitive mobile-device market. And it leaves the door open for up-and-coming handset makers to make their move.

"Motorola today is in the same situation it was in yesterday," said Carmi Levy, senior VP for strategic consulting at AR Communications. "It lacks a viable product map and continues to lose market share to competing vendors that are consistently bringing better products to market."

Having not produced a hit mobile phone since the Razr, introduced in 2004, Motorola has seen its share price decline 45% in the last 12 months. Brown, who took over after Ed Zander resigned early this year, is splitting the company into two divisions: the struggling mobile phone business and its broadband and mobility solutions unit, which includes enterprise wireless networks, connected home systems, and broadband network gear, including WiMax technology. While the handset division has faltered, slipping behind Samsung to fall to No. 3 worldwide in terms of sales, the broadband and mobility unit has enjoyed strong growth in recent quarters.

Revenue from Motorola's enterprise mobility solutions division, which sells wireless networking gear to businesses, jumped 43% to $7.7 billion in the most recent quarter, and its operating profit reached $1.2 billion.

One of the benefits of creating an independent, publicly traded handset company is that the enterprise business will no longer be tied to the flailing beast of the mobile phone unit, said Ellen Daley, a senior analyst at Forrester Research.

"The attention that the mobile devices business commands both in company attention and financials does not allow their broadband and mobility solutions units to grow fully and get the corporate attention they deserve," Daley said in an e-mail. "And it's a very different business than making phones that consumers buy."

For Motorola's competitors, the news of the split probably looks like chum in the water. Nokia, which now has a dominant 40% market share in global mobile phones, "is in an ideal position to dictate the direction of the market as it continues its transition away from commodity voice-focused handsets toward more feature-rich converged devices," said Levy.

And Samsung, whose recent growth has come at the expense of Motorola, can focus on its product strategy of bringing to market a stream of fashion-forward devices -- a niche that Motorola once occupied. Samsung previewed its new ultrathin G810 slider phone at Mobile World Congress in Barcelona, Spain, in February.

"What a celebration if you are a competitor," added Daley. "I think if you are Nokia and Samsung, you put your sights on the North American market and grab as much as you can."

In fact, one of the ripple effects of the Motorola announcement likely will be the continued ascendance of Asian device makers, some of which began life as OEMs for better-known Western brands. Along with Samsung, Chinese device-makers HTC and UTStarcom are expected to show off ambitious new mobile phone lineups at the CTIA Wireless show in Las Vegas next week.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
IT Strategies to Conquer the Cloud
Chances are your organization is adopting cloud computing in one way or another -- or in multiple ways. Understanding the skills you need and how cloud affects IT operations and networking will help you adapt.
Video
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll