"It's like, thanks for everything you did in the 20th century,
but you're being bought by a search engine," said Roger Entner, a
telecommunications industry analyst and founder of Recon Analytics,
a market research firm. He added, "Nobody ever buys a company and
leaves it alone."
Motorola traces its beginnings to 1928, when two brothers, Paul
and Joseph Galvin, started a company making power converters for
household radios. In 1947 it changed its name to Motorola, after its
popular car radio brand. The company produced radio phones that
helped American troops communicate in World War II, car phones in
the 1980s and the trend-setting MicroTac and Razr cellphones, among
other products.
But in recent years, after the Razr's popularity faded, Motorola
flirted with financial doom. It was only in the past few quarters
that it came back under the leadership of Sanjay Jha, a former
executive at Qualcomm, a telecommunications equipment maker, who
joined Motorola in 2008 when it was in danger of missing the rise of
the smartphone.
He made significant changes, cutting thousands of employees and
splitting the business in two: Motorola Solutions, which sells
equipment to businesses, and Motorola Mobility, which handles
consumer products like phones and television set-top boxes.
Motorola Mobility scaled back distribution in Europe and much of
Asia, focusing its efforts on China, Latin America and North
America. It emphasized fewer phone models and hitched its fortunes
to Google's Android software.
In the company's second quarter this year, it reported revenue of
$3.34 billion and a profit of $26 million. That was up from revenue
of $2.6 billion and a loss of $87 million for the period a year
earlier.
And the company shipped 11 million devices in the quarter, up
from 8.3 million in the period a year earlier. Most of the increase
came from smartphones -- to 4.4 million, from 2.7 million in the
period a year earlier.
The company has been producing products that dazzle gadget fans -
- no easy feat when taking on the iPhone. During the Consumer
Electronics Show in Las Vegas in January, Mr. Jha wowed audiences
with the Motorola Xoom, a tablet computer than many considered to be
the first real contender to Apple's iPad.
But the shipment numbers still pale in comparison with, say, the
second quarter of 2006, when Razr sales were soaring. Motorola
shipped 51.9 million of them that quarter. That was just before the
phone's price and popularity began to slip, dragging Motorola's
fortunes down with it.
Lawrence Harris, a senior research analyst with C.L. King &
Associates, an investment bank, said the mercurial nature of the
phone business might wind up feeling very foreign to Google -- and
challenging. He said he was also not sure that Google had put that
much thought into what to do with the physical manufacturing, the
distribution and the sales staff. Even further afield for Google is
Motorola's involvement in making television set-top boxes, a modest
part of its business.
"The priority is the patents," Mr. Harris said, noting that the
acquisition had come together quickly, suggesting that Google had
not had time to devise its entire strategy. "Then they'll have to
address how to get their arms around manufacturing."
In announcing the deal, Larry Page, Google's chief executive,
said that the two companies would "create amazing user experiences
that supercharge the entire Android ecosystem."
Kevin Smithen, an analyst at Macquarie Capital, said Google might
eventually sell the phone and set-top businesses. Motorola would be
"pared down if Google goes in that direction," he said.
But others say Google has the chance to help Motorola grow.
Carolina Milanesi, an industry analyst with Gartner, said Google's
ample pocketbook could help Motorola return to former glory by
expanding in places like Asia and Europe, and also by helping it
sell lower-cost smartphones that might appeal to a mass market.
Gartner's research puts Motorola's 2010 share of the mobile phone
market at 2.4 percent, down from 4.8 percent in 2009, though Ms.
Milanesi noted that more profitable smartphones were making up an
increasing share of Motorola's sales.
"Money from Google could get them back, if not where they were,
to a more prominent role," she said.
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News Column
Motorola Faces Uncertain Destiny with Google
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Source: (C) 2011 International Herald Tribune. via ProQuest Information and Learning Company; All Rights Reserved
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