Motorola Is Dead - Long Live the Motorolas

By Rob Spiegel
E-Commerce Times
01/04/11 12:35 PM PT

Investors are cheery now that Motorola has completed its long-anticipated split into two separate, more-focused firms, but there's still some nostalgia over the passing of the 83-year-old corporate titan. "In some ways it's sad," remarked In-Stat analyst Allen Nogee. "The big Motorola of the past is gone, but the truth is it has faded away slowly over the last several years."

"3 Payment Security Myths and Their Truths" - Payment Security goes beyond PCI Compliance. Understand 3 key myths and how they impede success, and learn an approach to Enterprise Payment Security to achieve successful Tokenization and PCI Compliance, without touching sensitive payment data. Learn more.

After 83 years, Motorola has formally split into two entities -- a move that was more than two years in the making. Motorola Mobility Holdings Inc. [NYSE: MMI] will produce consumer products, and Motorola Solutions Inc. [NYSE: MSI] will sell into the professional and corporate markets.

The break was spurred by activist investors such as billionaire Carl Icahn who pushed for two distinct companies to serve separate markets. The argument was that individual companies could better respond to different market needs. The consumer market is fast and fickle, while the enterprise market is slow and steady.

For each eight shares of original Motorola stock, investors will receive one share of Mobility and seven shares of Solutions. The split was originally planned for 2009 but was delayed because of the economic downturn.

Motorola's mobile phone business has been up and down in recent years. In the early 2000s, Motorola thrived with its successful Razr phones, but the line faltered when Apple (Nasdaq: AAPL) showed up with the iPhone. The company has rebounded sharply with Google-powered Android smartphones.

Motorola did not respond to the E-Commerce Times' request for comments by press time.

Motorola Mobility is poised to do well with its consumer products.

"Since they focused on a smartphone powered by Android, they're on the track toward turning the company around," Chris Hazelton, research director for mobile and wireless at the 451 Group, told the E-Commerce Times.

The company is also gearing up for a tablet-dominated future, he said.

"What the company is hoping to do is integrate [its consumer offerings] with the home theatre market," said Hazelton."They have a set-top box division. They're going to try to integrate multimedia with smartphones, tablets and TV."

As for Motorola Solutions, the company's position in the enterprise market looks secure.

"They are well positioned in all of the segments they play in the enterprise market," said Hazelton. "Companies are looking for tools to manage employee-owned and corporate-owned smartphones, and Motorola has been strong in that area."

Mobility will be competing in a consumer market that changes rapidly.

"For Mobility, I don't know what we're going to see. The consumer side had more than arrived with the smartphone where there is immense room for growth, but there's more competition and consumers are fickle," observed Michael Morgan, senior analyst, mobile devices, for ABI Research.

"They're going against every other Android, and Apple and RIM," he told the E-Commerce Times.

The breakup of the company could be an advantage, since smaller companies are able to focus more easily.

"At one time, mega-companies like Motorola and GE and IBM (NYSE: IBM) were the way to go, but in the 83 years since Motorola was founded, things have changed," said Allen Nogee, principal analyst for wireless technology at In-Stat.

"No longer do companies need to be huge to be leaders in their field," he told the E-Commerce Times. "There are so many third-party companies that exist -- that can help with design, development, semiconductors -- that smaller companies can now compete very effectively in today's market. In many ways, being too large is a detriment. I think this was the case for Motorola."

The breakup into two smaller companies may ease the struggle Motorola has faced in recent years.

"The separation of phones and mobility from the Motorola enterprise market will be a good thing. I think this separation will allow the company to better regroup and regain its competitive aspects in smartphones," said Nogee. "In some ways it's sad. The big Motorola of the past is gone, but the truth is it has faded away slowly over the last several years."

Print Version E-Mail Article Reprints More by Rob Spiegel

Next Article in Wireless

Sprint Fires EVO Across Verizon's 4G Bow
January 04, 2011
Days before Verizon is expected to kick off its 4G rush in earnest with a slate of new LTE phones, Sprint has trumpeted the arrival of a new 4G device for its own network. The EVO Shift is similar to the existing Sprint EVO but adds a slide-out QWERTY keypad. The unit's competitively priced, but added costs for 4G service and the still-limited reach of 4G networks may give some buyers pause.

More by Rob Spiegel

Qualcomm Tucks Atheros Into Its Arsenal
January 05, 2011
Qualcomm's acquisition of WiFi technology company Atheros is drawing generally positive reactions, since it will be able to maintain its core strengths while advancing into new markets. There are a couple of companies that might not be so sanguine about the deal. Broadcom will begin feeling the heat, and Texas Instruments could also break a sweat. Goldman Gives Facebook a $450M Lift
January 03, 2011
Facebook is gearing up to compete in the major leagues, and it just got a strong helping hand from Goldman Sachs, to the tune of $450 million. Goldman partner Digital Sky poured another $50 million into the social network, which brings its valuation to a cool $50 billion. "There's a feeding frenzy around this property," noted tech analyst Rob Enderle. "Facebook has to grow very quickly." Survey Surprise: Online Content Doesn't Have to Be Free
December 30, 2010
Though there's still plenty of experimentation with different business models, online content providers are finding that many consumers are actually not averse to paying for content they value. In fact, the Pew researchers discovered a surprising willingness to subscribe to newspapers and magazines online.