Last week, Motorola Inc. said it would spin off its flagging mobile devices unit from its profitable broadband and mobility solutions business.
But that broadband division -- hailed for its growth -- is pushing for a new identity in order to remain competitive. Meanwhile, it is also unclear whether the broadband division will have a long-run advantage when severed from the handset unit.
Motorola's broadband business sells integrated voice, data and video communications over wireless networks for enterprise businesses, hospitals and government and public safety agencies. It's also known for two-way radio products and cable modems. But much of Motorola's strongest market hold has been in scanning and data collection using wireless networks and handheld computers in warehousing, retail and hospitals.
Lately, Motorola has been looking to broaden its strategy -- not dumping its traditional vertical markets, but taking Wi-Fi into the front office of the enterprise to bank on wireless broadband big-revenue applications, including integrated voice, messaging and data.
New partner program aims to boost integrated solutions/services sales
On March 24, just two days before Motorola announced the big split, executives introduced a channel partner program enabling partners to sell integrated mobile infrastructure and services using its Good Mobile Messaging and Good Mobile Intranet technology. Value-added resellers (VARs) could ultimately offer wireless devices, data service plans and firewalled email applications. The offering pulled the secure wireless enterprise network out to Motorola's smart devices and phones, as well as phones from a few other companies.
"Most partners tend to focus on the blue-collar side of the business -- scanners, mobile computers and wireless infrastructure for hospitals and retail stores. Their users tend to be field force -- healthcare workers and retail workers," said Dan Rudolph, director of product marketing for Motorola Good Technology Group. "We're going to expand from the shop floor to the corner office."
The move into so-called "white-collar businesses" and the channel offering got mixed reactions from partners.
Some see it as a revenue- and strategy-enhancing move. "We have clients that need to use Palm or Windows devices -- primarily those would be our candidates," said Alex Zaltsman, co-founder and managing partner of Motorola partner Exigent Technologies LLC in Mt. Arlington, N.J. He said he would use the offering to take on Research in Motion's popular BlackBerry in the enterprise.
Still others see converged offerings as a watering down of what Motorola does best.
"Right now I think Motorola and the former Symbol [Technologies] are trying to find their sea legs, and they are losing their identity in the AIDC market," said Richard Lowney, CEO of Clearview Software International and co-founder of Amherst, N.H.-based Motorola partner Blue Ivy Solutions. AIDC refers to automated identification and data capture.
"I understand building collaborative offerings, but on the [partner] list, can you see large systems integrators? Moms and pops are what you see. I see a lot of these resellers switching their alliances to companies focusing on the AIDC market," he said.
Motorola's partner list boasts both small and large resellers. But many of the "moms and pops" come from Motorola's 2006 acquisition of Symbol Technologies -- a leading maker of proprietary data collection technology. Motorola bought it to offset an industry-wide dip in consumer handset sales. And the strategy worked. Motorola gained thousands of Symbol partners and secured a leading name in that industry. But the Symbol buyout was part of an overall strategy. That same year the company acquired Good Technology with its mobile messaging and email program that rivaled BlackBerry's and was ultimately used on Motorola's smart devices. The goal was to offer integrated enterprise services.
Motorola executives were not available to comment on how the company split would affect this integrated offering. But some analysts have noted how counterproductive it seems to spin off the handset division when execs intend to offer end-to-end solutions, especially with the use of the Good technology.
"A full-service company offers customers and channel partners an ideal scenario where product lines are integrated and symbiotic," said analyst Tom Nolle, founder of technology consultancy CIMI Corp. The Motorola spin-off isn't happening because executives think it's strategically smart, said Nolle, but because of pressure from activist investor Carl Icahn, who owns 6.3% of Motorola shares and was pushing hard for a split.
"You have had stock performance nailed to the ground by the financial performance of one of the business units. If Motorola breaks itself up, the high flying shares of the unencumbered part of the company would go up and then shareholder value would increase. Companies are legally responsible to maximize shareholder value," Nolle said, adding that the move won't necessarily help the company's long-term business goals.
But John Convery, vice president of vendor relations and marketing of Denali Advanced Integration, a Redmond, Wash.-based Motorola partner, said a split-off handset division will receive more research and development resources, eventually improving those products and making them competitive. As for the broadband side, he said it could mean the company will provide more tools and spend more assets in the channel. "There will be a focusing on resources that may have been spread too thin," he said, adding that Denali's Motorola practice is soaring.
Current Analysis analyst Michael Brandenburg said the split could be positive and won't affect Motorola's change of identity. Some have said Motorola wasn't leveraging its smart devices as well as it could have anyway, according to Brandenburg. More importantly, he noted, there is finally strong uptake of WLAN in the enterprise. While Cisco Systems Inc. owns about 60% of that market, Motorola and Aruba Networks duke it out for second place.
"I think they have to focus on the IT department, because going forward it's the IT manager and not the warehouse manager that's making the decisions," Brandenburg said. "They have to focus on taking on Cisco and Aruba."
Motorola has not shown signs of abandoning its traditional vertical markets, he said. In fact, it announced a new Wi-Fi data collection module at the CTIA wireless show this week. But, Brandenburg added, these vertical markets depend on Wi-Fi, which is just a "big dumb pipe" that can support revenue-earning apps like IP voice and video. "It's just a natural transition for the company."