Motorola reveals handset recovery strategy - Mobile World Live

Motorola reveals handset recovery strategy

27 OCT 2009

Motorola used its Q4 results announcement yesterday to reveal further details on how it intends to turn-around its ailing handset division, which suffered a fourth-quarter operating loss of US$595 million after sales declined 51 percent to US$2.35 billion. The vendor said it plans to put great emphasis on smartphone development and talked up its commitment to Google’s Android operating system, whilst at the same time reiterated previous plans to eventually spin-off the division. “Our platform decisions and market focus will result in fewer new product launches than in the past year. We will be much more focused on mid and high tiers,” said Sanjay Jha, company co-CEO and CEO of Mobile Devices. “Our roadmap has a much greater focus on bringing smartphone functionality into lower tiers, with touch enquiry and on experiences around messaging and mobile Internet.” Jha added that “between 30 and 40 percent of our R&D investment is on smartphone[s] going forward,” with the company prepping “important product slots in the fourth quarter [2009] and first half of 2010.” He also emphasised the company’s excitement surrounding the launch of open source Android-powered handsets, stating that short-term development will focus on Google’s operating system at the expense of Microsoft’s Windows Mobile. “Windows 6 series is available in 2009 and as compared to Android, we believe in 2009 Android is more competitive; more of our effort and focus in 2009 is going to Android, but in 2010 when Windows 7 will become available, we will then participate in a more focused way in Windows Mobile 7.”

Commenting on Motorola’s delayed plans to spin off its Mobile Devices division, company co-CEO Greg Brown said, “our plan of record remains the separation,” stressing that both CEO’s “believe it’s the right thing to do.” However, Brown noted that “in this envionment it’s unrealistic, given both the external global economic environment” as well as the division’s current financial position. “It’s going to take time,” Brown admitted. Finally, Sanjay Jha commented on cost cuts and the unit’s future financial performance. He said the handset division is planning to cut its global workforce by 25 percent, helping to generate savings in excess of US$1.2 billion this year. However, he would not specify a timeframe for breakeven. “The breakeven year… is clearly outside of 2009. We exit 2009 with a very competitive cost structure. If we are able to execute and deliver on our smartphone road map and bring smartphone functionality to [the] middle of this year, with efficiencies that we’ve derived with our platforming strategy, with a more modular development structure, I think that sometime after 2009, whether it’s 2010 or 2011, I’m not going to speculate today, but we are very confident on the path that we’re on.”


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