Summary

Motorola reported a profit based on special accounting items, while sales continue to fall. However, is a real recovery in sight? Will the vision for success thanks to android work materialise on time?
 

Analysis

Motorola has had a multi-platform strategy for the mobile device business unit,  for the past 10 years at least. This has not brought much financial success to the company, except for the Razr, based on one of their proprietary operating systems: P2K. Replicating software development, product management, marketing and sales across all platforms in development at any one time, has meant that Motorola's mobile devices business unit was a very heavy machine to run, with no synergy between the various platforms, replication and competition from each project for the same budget.
Motorola has reduced its platform portfolio from over 20 combinations of operating system, silicon and user interface, to just 3: Android, Windows Mobile, and its proprietary OS, P2K.
 
In the past 3 years, Motorola has mainly worked on their linux platform and Symbian, not to the expected levels of return. While they are winding down their Symbian business, cost-cutting has meant redundancies for many Motorolans in the devices business unit. Motorola is also betting on open source, which is one of the attraction of android.
This brings the following questions:
  • how many and what quality personnel is still available to carry out the work on the Google Android  platform?
  • why canceling all work on Symbian, not joining the Symbian Foundation (open-source) and changing horse completely to go with android?
  • does Motorola really think that it will be easier to tackle head on a competition made of HTC and all the other handset manufacturers working on android, rather than nokia (major backer of Symbian Foundation)?
Thankfully, there are a number of good points in the current strategy;
  • clear focus
  • target high- and low-end of the smartphone market
  • very strong and visible efforts to attract developers and make the most of the platform
  • making the most of android' and Motorola' USPs: integration with internet connectivity with the device and changing up form factors
Motorola may be able to pull this one out; their focus and drive should be reckon with. Timing is paramount, given the very hot competition around android, in terms of devices, channels to market and being able to attract developers.
So I would say that if those devices are indeed launched in 2009, success should materialise immediately, and be followed by further devices for specific target markets. Investors need to keep a close eye, and if by H1 2010 this hasn't materialise, then Motorola will have been too ambitious for this quick turnaround plan, however, good it was.

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.