Motorola to spin off its mobile division?
16th January, 2010 by adina
Tags: Mobiles, Motorola, News
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Sources very close to Motorola suggest the company is rethinking its plans of spinning of its mobile business. Successful sales of devices like the Droid and bids for Motorola’s mobile division situated $1 billion lower than the $4 billion to $5 billion expected by the company have given strong reasons for a rethink of whether keeping the mobile division inside or not.
According to the Wall Street Journal, two companies have placed bids and qualified for the second round – Arris, a cable equipment manufacturer, and Huawei, the Chinese telecom producer. Arris, which is too small, would need private equity to be allowed to purchase Motorola’s mobile division. There is an extra bidding scheduled for mid-February, but it could be postponed or even cancelled if Motorola changes its strategy.
Motorola, based in Illinois, has planned to sell its mobile unit before Sanjay Jha, currently the CEO of the company, has occupied this position. This topic is now reconsidered, together with the whole mobile strategy. All Motorola’s smartphones were previously running the not very well received Windows Mobile operating system and the success of the company was depending on media phones, such as the ROKR and RAZR lines, neither of them having a high profit margin or an impressive shipment volume.
In 2009, Sanjay Jha said the company would have to give up using Windows Mobile completely for its handsets by 2010 and focus on devices like the Cliq, Backflip and, last but not least, the Droid. Other rumoured handsets are the keyboard-less Droid and the opus One. Verizon’s aggressive promotion of the Droid has lead to 800,000 Droids sold in a single month and has generated more than expected high profit margins. As a result, the decision of selling the mobile division is now reviewed.
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Windows Mobile was a disaster for Motorola, dragging its handset sales down, and almost destroying the company.
Now that Sanjay Jha is at the helm, he has gotten rid of all Windows Mobile and switched to Android. And look what happened. Sales are suddenly doing well again.
The problem afflicting Motorola was the Windows Mobile OS from Microsoft. Get rid of that, and everything comes good again.
The same situation is repeated across the industry.
LG made the biggest commitment to Windows Mobile of any handset OEM. Its sales plummeted along with Microsoft’s market share. LG learned the hard way, and just announced last week that the company will now focus on Android.