Essay Preview: Mr
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Late yesterday Motorola announced that it was considering a structural and strategic realignment of its business to enhance shareholder value. Motorola is exploring its options in order to better equip its Mobile Devices business business to recapture global market leadership. The company is considering spinning off or selling its Mobile Device division, but no final decision has been made and the mobile phone division may yet be retained.
The news, while dramatic, will not have only limited immediate impact. Motorolas Mobile Device division will continue to operate as normal and we can expect to hear about some of its latest development at MWC in 10 days time. Furthermore, given Motorolas recent performance, it is inevitable that a strategy rethink and or realignment, in whatever form it might take, was inevitable.
Motorolas Mobile Device division makes up about 50% of Motorolas total sales of $36 billion. However the division has been performing poorly recently with its market share declining by half to 12% from its peak in 2006. The major problem has been an inability to compete at either the high end or low end of the market in many markets. It has lost out to Nokia in the very low cost handset segment that dominates emerging markets and has failed to create an effective competitor to Nokias Nseries and multimedia handsets in Europe.
Motorolas recent purchase of a 50% stake in UIQ offers a very real solution to its woes in the high end multimedia phone space. Motorolas Z8 and Z10 devices, powered by UIQ, have been favourably received and further Motorola UIQ handsets are expected to be announced this year. However it is to early to assess any impact this may have in the longer term and has to be set against a background of a company with a multiple software platform strategy.