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NoMo Moto? Is Motorola's Cell-Phone Business Worth Buying?

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Motorola said today it’s exploring strategic options that include selling its handset business. The news comes on the heels of the company announcing a terrible fourth quarter, thanks to continued weakness in the handset business.

razrburn.gifAny buyer should look carefully at Motorola’s handset business. By putting it up for sale, Motorola is admitting that the handset division is operationally weak, and to some extent, beyond redemption.

The overreliance on RAZR, and later its inability to get out of the rut of producing phones that never became “hits,” proves that the bureaucratic poundage was weighing the company down. Even if it was operationally sound, the company would need some vision to get back on track and fight it out with the likes of Nokia, Samsung, LG and newcomers likes Apple.

It is a hard fall for a once-proud company, which along with Nokia and Ericsson made up the triumvirate that controlled the wireless business with an iron fist. In order to understand how badly Motorola has stumbled, compare its daily sales of roughly 454,000 with Nokia’s daily sales of 1.3 million.

Recently, companies like Alcatel and Siemens have sold off their handset businesses to Asian handset makers. Those deals didn’t work out too well for the buyers, though. Buyers beware.

13 Responses to “NoMo Moto? Is Motorola's Cell-Phone Business Worth Buying?”

  1. How the mobile telephony market changes! I recall visiting a Cingular store (pre-AT&T Mobility) when the RAZR was first introduced at $500–yes, $500 with a two-year contract. Inside the Cingular store was a large stand-alone display showing a picture of the original RAZR. I recall asking the store sales person how well the RAZR was selling. He paused, said “o.k.” and then told me a story of one guy who purchased a RAZR a few days earlier. (His wife, after hearing what he paid, told him to immediately return it.) Fortunately or unfortunately, we live in a mobispheric age where rapid changes and expectations by mobile manufacturers, carriers, users, application developers, mobile websites and social media are rapidly morphing the not-so-long-ago world of “cell phones.” Google’s Open Handset Initiative, Apple’s introduction of the iPhone and the globalization of mobile devices are just some of the driving forces. There are now 3.3 BILLION handsets on the planet–over 250 million in the U.S. alone. The world has changed for Motorola and everyone connected to wireless devices. Moto is not dead. It’s just re-grouping. Brian Prows, MarketingBeyond.

  2. How much of Moto’s problem is the over-reliance on the RAZR and how much is a distribution problem?

    Moto’s high-end handsets are mostly in the US. With Sprint and Verizon (and in particular Verizon) they can’t add in any fun high-end features. Also, the US market is very hostile towards high-end handsets (they will take RIM/iphone) — S-E and Nokia also can’t make headway here — since you really need a RAZR type device to get people to shell out $300.

    While Moto is good in China and India, they may not be making a huge amount of money there. Nokia also makes some huge sales there, but they have the European/Middle-Eastern markets to move their high-end stuff.

    It’s a shame. RAZR was one of the best-constructed handsets of all time, and with the RAZR2 v8 they finally have a decent interface.

  3. Zander and Warrior drove Moto into the ground. Moto was the best in the business. These two morons failed to nurture this part of Moto’s business. Warrior got hung up on being “seamless” and presenting her seamless idea to the world. She also referred to Zander as an idiot when she saw that he had a “content-free” presentation on their way to some coference and that is when she came up with her “seamless” thing. Well, there you have it – dumb and dumber I guess.

  4. MOTO has definitely fallen on hard times. There is no doubt about that. They would be smart to sell the business, although then the company would be a ghost of its former self…betting their entire future on WiMAX?

    Following various companies’ press releases shows a management exodus. This could be a good thing if they are the ones who were incapable to maintaining a strong MOTO. On the other hand, often the best leave first.

    Rumors abound that Dell could be interested. Dell could bring some much-needed capabilities to MOTO that few others could (in terms of logistics and execution).

    And about the Siemens handset business. That deal worked out exactly like I imagine it was meant to . Siemens paid BenQ to take on the Siemens handset business. Essentially, Siemens outsourced the closure of Siemens’ German handset business. Siemens wanted to distance itself from the matter to avoid direct backlash from the ever-powerful German trade unions and workers councils. I’m not sure that they were sufficiently insulated, but structurally that deal probably worked out exactly like it was meant to. IMHO.

  5. Jesse Kopelman

    I think brands are pretty worthless in the handset business. Even though one might have an affinity for a particular brand (eg I like Nokia phones), that is trumped by features and price (eg I haven’t had a Nokia phone in years). In the US things are further skewed, with handset subsidies playing such an important role in buying decisions. About the only companies that have anything approaching a real brand are Apple and RIM, thanks to their unique OS. Motorola’s handset business might have looked interesting back in the age of the StarTAC, but something tells me those loyalists have long since moved to Blackberries. Rather than scuttling its own handset business for what will likely be a big loss, maybe Motorola should be looking to purchase RIM to actually make it a player again. A Moto Blackberry sounds like a damn sexy beast.

  6. My god! How times change… It was not over a couple of years ago that some people were actually plonking down 300 bucks for a Razr. Some of them are probably still on their two year contracts! Who would have thunk then that this would come to pass, and so soon at that…

  7. How is it that the industry as a whole uniformly bundled the product management of an entire device category? In my line of work it is called, ‘Laurel Sitting’ – the handset manufacturers were content to churn out me too products for so long that they beat any aspirations to innovate out of the idealistic engineers that came to the business.

    Even the latest gadgets are disappointing.