Are Motorola's phone days over?

As the 2008 Mobile World Congress begins, uncertainty surrounds one of the biggest names in mobile phone history. Will it stay or will it sell, and can it recapture the past success of products such as the RAZR V3?

By Simon Brew, 11 Feb 2008 at 14:12

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Yet there are plusses that can't be overlooked, and that's why any kind of potential deal has not been dismissed out of hand. Even though it's far from the position of strength it once enjoyed, Motorola nonetheless does enjoy a foothold in the market (particularly in America), and does possess a brand name that's synonymous with the mobile phone. Also, the mobile phone market is still growing, both in terms of volume and revenues. In spite of its quickening maturity, there is still some headroom here.

Names

Thus, a variety of names have quickly been linked with a purchase. Samsung are currently number two in the market, but it trails Nokia by some distance, and in a slight parallel of the Microsoft/Yahoo situation, a deal between the companies in second and third place in the sector would create an opponent with some clout. Inevitably, the climbing Sony Ericsson is also mentioned for much the same reason. The advantage to both of these is that Motorola enjoys success in geographical sectors where both firms are looking to make further inroads.

Yet that BenQ lesson does seem to have been learnt, and there's little expectation that this would be an easy deal to finalise, nor would Motorola be an easy business to integrate. There's a real suspicion to many big players that a transaction may prove to be more trouble that the price tag warrants, and there's little guarantee that a deal would be a success.

It does perhaps make more logical sense for one of the smaller players in the handset market to take the plunge, but the widely-linked LG simply isn't believed to have the money to make such a deal possible. That also counts for Huawei, another name being cited. And it's likely to rule out Lenovo, too.

And that leaves who else? Well, firms currently sitting outside the handset business. Dell, for instance, is looking for ways to expand its own business, and a handset is one logical route. But it's already come out and said that it's simply not interested. Michael Dell said '" as reported by IT PRO earlier this month - that Dell is 'more focused on the computer business', and the company has distanced itself from a Motorola deal.

As things stand, Motorola hasn't committed itself to a sale, although its comments clearly had the intent of bringing some form of potential buyer to the surface. But there's a very real possibility here that the tactic simply won't work, that it won't be able to find a suitor willing to match the kind of price Motorola is looking for. And that could mean that Greg Brown will have to '" whether he likes it or not '" tackle the problem in the handset unit and look to turn it round himself. That could, in theory, pretty much wipe out 2008 before any firm result is seen, by which time the asking price for the handset unit it likely to have fallen far below the numbers on the tag at the moment.

For the first time in this occasional series, Motorola's problem isn't that its handset division is vulnerable to takeover. It's vulnerable to being outright ignored altogether. Unless there's a private equity investor out there looking to roll the dice, it could be a very long 2008 for Motorola shareholders, and things are certain to get worse, with no guarantee of a turnaround at the end of it all.