News
Motorola sells network division to Nokia Siemens
2010-07-20
2010-07-20
NEW YORK -- For decades, Motorola's products told the story of the march of electronics into the hands of consumers: car radios in the 1930s, TVs in the 1940s and cellphones starting in the 1980s.
Now the iconic company is breaking up, the victim of changing markets and the need to present simpler stories to investors.
Motorola's cellphone business, which as late as 2007 was riding high on the Razr's success, is struggling to reshape itself. And its survival may ride on whether it can turn a once-mass-market cellphone business into a much smaller mold, focused on playing in the same niche as Apple's popular iPhone.
Early next year, Motorola is slated to separate the business that makes cellphones and set-top boxes from the one that makes police radios and bar-code scanners, Enterprise Mobility.
In a prelude to that split, Motorola announced Monday that it is selling the bulk of its wireless Networks division for $1.2 billion to Nokia Siemens Networks, freeing Enterprise Mobility from a network business that has been holding it back in the eyes of investors.
Enterprise Mobility is the part that's currently doing the best -- what Morgan Keegan analyst Tavis McCourt calls the company's "crown jewel." Its customers are police departments, government agencies and big retailers, putting it outside consumers' view.
Its roots stretch back further than any other Motorola business: The company, then called Galvin Manufacturing, sold its first two-way police radio system in 1940 to the Police Department in Bowling Green, Ky.
In contrast, Networks, which supplies equipment to wireless carriers, has an aging product portfolio, and some see it as too small to compete in today's global market. Wireless carriers have been consolidating into larger companies and now prefer to deal with only a couple of equipment vendors each, narrowing the scope for small suppliers such as Motorola.
The point of one company making both cellphones and the equipment that connects their calls has diminished as well.
The industry was pioneered by Motorola, LM Ericsson AB and other companies that made both phones and network equipment. But with technology increasingly standardized, there is no longer much synergy; any phone will connect to a compatible network.
So Ericsson spun its handset business into a joint venture with Sony and Nokia while combining its network business with Siemens to form a joint venture focusing on handsets.
But cellphone developments are being driven by companies that don't make any network equipment, including Apple and Research In Motion, creator of the BlackBerry. That blindsided Motorola, which made cellphones for the first commercial U.S. network in 1983.
NEW YORK -- For decades, Motorola's products told the story of the march of electronics into the hands of consumers: car radios in the 1930s, TVs in the 1940s and cellphones starting in the 1980s.
Now the iconic company is breaking up, the victim of changing markets and the need to present simpler stories to investors.
Motorola's cellphone business, which as late as 2007 was riding high on the Razr's success, is struggling to reshape itself. And its survival may ride on whether it can turn a once-mass-market cellphone business into a much smaller mold, focused on playing in the same niche as Apple's popular iPhone.
Early next year, Motorola is slated to separate the business that makes cellphones and set-top boxes from the one that makes police radios and bar-code scanners, Enterprise Mobility.
In a prelude to that split, Motorola announced Monday that it is selling the bulk of its wireless Networks division for $1.2 billion to Nokia Siemens Networks, freeing Enterprise Mobility from a network business that has been holding it back in the eyes of investors.
Enterprise Mobility is the part that's currently doing the best -- what Morgan Keegan analyst Tavis McCourt calls the company's "crown jewel." Its customers are police departments, government agencies and big retailers, putting it outside consumers' view.
Its roots stretch back further than any other Motorola business: The company, then called Galvin Manufacturing, sold its first two-way police radio system in 1940 to the Police Department in Bowling Green, Ky.
In contrast, Networks, which supplies equipment to wireless carriers, has an aging product portfolio, and some see it as too small to compete in today's global market. Wireless carriers have been consolidating into larger companies and now prefer to deal with only a couple of equipment vendors each, narrowing the scope for small suppliers such as Motorola.
The point of one company making both cellphones and the equipment that connects their calls has diminished as well.
The industry was pioneered by Motorola, LM Ericsson AB and other companies that made both phones and network equipment. But with technology increasingly standardized, there is no longer much synergy; any phone will connect to a compatible network.
So Ericsson spun its handset business into a joint venture with Sony and Nokia while combining its network business with Siemens to form a joint venture focusing on handsets.
But cellphone developments are being driven by companies that don't make any network equipment, including Apple and Research In Motion, creator of the BlackBerry. That blindsided Motorola, which made cellphones for the first commercial U.S. network in 1983.
Source: http://www.star-telegram.com/2010/07/19/2345969/motorola-sells-network-division.html
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