Friday, March 28, 2008

Breaking Up is Hard To Do?

Well, THAT was fast! No sooner did I finish my blog entry on Motorola's mobile handset business than the company announced that it will split into two parts, with the mobile business in one company and everything else in the other. Details about the breakup are still very sketchy, and the distribution of stock in the two companies to Motorola subscribers isn't planned until some time next year.

The breakup might placate Carl Icahn, but it does nothing to solve the fundamental problem at the mobile division, which is that the company is an "also-ran" in every product segment. That would probably be fine if the company was at least a strong number two in most segments, but it's not. If the recent Mobile World Congress is any indication, Moto's product development process seems to have stalled, and the pipeline of compelling future products is in doubt.

CTIA starts next week, so we'll have another view into Motorola's future product pipeline. However, if the rumors that have surfaced so far are true, Motorola's introductions will focus more on WIMAX and picocell base stations than on new handsets.

It's difficult to believe that Motorola can fix its product development problems while its mobile business is in the limbo of a spinoff that's as much as a year away. Whatever Motorola does, either to sell or spin off the business, has to happen quickly, not next year. Otherwise, the company's market share, and the resulting value of its mobile business, will continue to deteriorate.

No comments: