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Namaste, Moto! Indian TV Guy Wants Your Handset Business
Indian electronics maker Videocon has designs on Motorola’s ailing handset division, according to news reports. Videocon Chairman Venugopal Dhoot says he’s heard that the U.S. mobile giant is going to put its wireless handset business up for sale, and if that happens, his company — well-known for making budget televisions and appliances — wants to buy it.
He wouldn’t be the first Indian industrialist with global ambitions. More recently, Tata bought out Ford Motors’ Jaguar and Land Rover business for $2.3 billion. Tata and its local rival Reliance have been on a buying binge for a while now, but buying a branded mobile phone maker would be a first for either of them.
“We will be bidding for Motorola’s handset business, but at this point of time I cannot give out the price or the value of the bid,” Dhoot told Dow Jones Newswires. He’s considering using Motorola as the centerpiece of his vertically integrated retail strategy: He already has the licenses to set up a mobile network in India and a network of 1,000 stores across the country — handsets could be the missing piece.
Given that India continues to be one of the fastest growing mobile markets — 251 million connections, at last count — this move shouldn’t come as a surprise. I have been hoping that the massive telecom buildout in India would spur a lot of local innovation and the formation of telecom/networking equipment startups.
Google’s White Space Proposal
Google has issued to the FCC its plan for what it would like to do with the airwaves freed up by the upcoming conversion from analog to digital television, and it’s pretty optimistic. You may recall the 700 MHz auction that decided the fate of licensed spectrum and raised $19.59 billion for federal coffers, but there’s the matter of what to do with the space between the digital TV channels known as white space.
Google, Microsoft, Intel other technology players would like to see an open wireless broadband service, and today the search giant outlined its plans to make this possible. The plan’s essentials include a vision of portable and fixed broadband devices with Android offering a low-cost operating system for such devices. In addition to working in the white spaces, the devices should also work on the “open access” 700MHz spectrum that Verizon purchased. Because building network equipment is a challenge, Google plans to help out third-party device makers at no cost.
To get the National Association of Broadcasters (NAB) and those operating wireless microphones on board, Google is also proposing a layer of security to ensure that white-space devices will play nicely with existing unlicensed spectrum users. Google has gone one-step further than traditional spectrum sensing technologies, and proposed a “safe-harbor” spectrum area where only microphone and television signals can operate, as well as a beacon for wireless microphones and geo-location to protect broadcast television signals.
That’s pretty generous — and likely a lot further than other white-space proponents are willing to go. Rick Whitt, the telecommunications and media counsel for Google in Washington, said on a conference call this morning that Google’s plan borrows from Motorola’s plans to shield spectrum; but he admits that other interested parties in the White Spaces Coalition or the Wireless Innovation Alliance may have other ideas.
It’s also uncertain if such efforts would placate the NAB and wireless mic camps. The beacons for wireless mics broadcast a signal that essentially shouts,” I’m here, don’t use my spectrum.” The geo-location would check spectrum against a database of other users of that spectrum prior to trying to use it as way of protecting TV broadcasters. The beacon is an add-on product for existing mics and costs about $10.
Much like siblings sharing a bathroom, users of unlicensed spectrum aren’t likely to relent when it comes to Google’s proposals, but it does make Google look reasonable before the FCC, which will hopefully issue rules regarding the white space some time this year.
Once the analog-to-digital TV conversion happens next February, and provided the FCC rules are in place, Whitt said manufacturers can start building and testing their white space devices, getting the end products to the consumers in times for the 2009 holiday shopping season.
I’m doubtful that the FCC rule-making will be complete in time, and I’m also skeptical that the current group of technology companies arguing for this spectrum will continue to present such a unified front as the process continues. Right now they all want to the same thing, but as they get closer to getting it, each will have its own plans for how it wants to build out a network to take advantage of the spectrum.
At that point, the debate over rule-making will devolve into those seeking to build mesh networks arguing for rules that make their lives easier rather than ones that would benefit competitors seeking to build out towers or hybrid networks. Now that’s when it gets interesting.
Google
broadband
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Technology-News
NoMo Moto? Is Motorola’s Cell-Phone Business Worth Buying?
Motorola said today it’s exploring strategic options that include selling its handset business. The news comes on the heels of the company announcing a terrible fourth quarter, thanks to continued weakness in the handset business.
Any buyer should look carefully at Motorola’s handset business. By putting it up for sale, Motorola is admitting that the handset division is operationally weak, and to some extent, beyond redemption.
The overreliance on RAZR, and later its inability to get out of the rut of producing phones that never became “hits,” proves that the bureaucratic poundage was weighing the company down. Even if it was operationally sound, the company would need some vision to get back on track and fight it out with the likes of Nokia, Samsung, LG and newcomers likes Apple.
It is a hard fall for a once-proud company, which along with Nokia and Ericsson made up the triumvirate that controlled the wireless business with an iron fist. In order to understand how badly Motorola has stumbled, compare its daily sales of roughly 454,000 with Nokia’s daily sales of 1.3 million.
Recently, companies like Alcatel and Siemens have sold off their handset businesses to Asian handset makers. Those deals didn’t work out too well for the buyers, though. Buyers beware.
Oh No Not Again Moto
CEO change has had no impact on Motorola’s fortunes. Their handset business continues to spiral downward and is turning into a downright disaster. Fourth quarter 2007 mobile phone sales slumped to 40.9 million units vs 65.7 million in 4Q 2006. Mobile division sales were down 38% year over year, with mobile devices business reporting an operating loss of $388 million. And it isn’t over: first quarter 2008 is going to be worse, with forecast for further market share losses. In comparison, other divisions including Symbol seem to be doing well.
Updated: Ex-Moto CTO, Now CTO of Cisco Systems. Short Interview
Motorola Chief Technology Officer Padmasree Warrior traded Chicago for the San Francisco Bay Area. She has joined Cisco Systems (CSCO) as chief technology officer, San Jose based company announced today. She didn’t waste much time and has started blogging on her new Cisco blog.
Okay it is full of PR sanitized corporate speak, but having read her writings in the past I think this should be a good one to watch. I think the world of her abilities and Cisco picked up a great executive to add to their team. This move also explains why Motorola took down her blog. I am going to chat with her later today and update the post.
“For next few weeks I want to listen to what everyone at Cisco has to tell me and learn,” said Padmasree Warrior, just an hour after it was announced that she was joining Cisco Systems as the Chief Technology Officer. I got a chance to speak with her as she rushed between meetings. She declined to comment on the specifics of her switch from Motorola to Cisco.
“I have admired Cisco because of their technology leadership and their business model innovations and innovations from a larger perspective,” she said. In her mind Cisco’s apporach to global opportunities along with macro-shifts in the over communications and computing industries make her job most exciting.
Though she spent recent years at a mobile-focussed company, Warrior said that her 23-years-in-technology have given her the grounding she needs to adjust to an all-IP future. “For the longest time, communication technologies have been vertical,” she said. Video meant cable, voice meant telephone, and data translated into Ethernet. “It is all horizontal - now network is the platform,” she said.
I asked her if we are in a brave new world of COMMputing, where the lines of computing and communications have blurred to such a degree that you can’t tell the difference. Google and Amazon Web Services are perfectly good examples of this commputing movement. She agreed and promised to share more of her thoughts at a later stage - after she has settled down in the Bay Area and spent time in Cisco trenches.
Originally posted at 1.41 pm
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infrastructure
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Technology-News
Motorola C-Suite & The Ex-Factor
The recent executive shuffle at Motorola (MOT) - Ed Zander out, Gregory Brown in - prompted a visit to their press release archives, and what I learnt: there is a constant exodus of senior management. Some leave because they don’t get the top job (CEO) and others are asked to leave because they can’t do the job. Whichever way you look at it - this constant shuffling is a sign of a deeply troubled company, that needs to make some tough strategic decisions about its future.
Here is a short list of those who have come and gone in past five years.
- July 27, 2002: President Ed Breen leaves to join Tyco.
- September 22, 2003: Christopher Galvin, CEO and Chairman is nudged out by the board.
- January 2004: Ed Zander is named CEO.
- January 13, 2005: Mike S. Zafirovski, Motorola’s president and chief operating officer, tipped to get the CEO job resigns and is soon named CEO of Nortel.
- February 19, 2007: Ron Garriques, a key executive incharge of mobile phone division leaves for Dell.
- December 1, 2007: Gregory Brown, COO of Motorola to replace Ed Zander as CEO.
- December 3, 2007: CTO Padmasree Warrior resigns from the company.
Photo by Katie Fehrenbacher/GigaOm via Flickr.
Moto Zaps CTOs Blog
In the pre-blog world, when you left a company, they would escort you out of the building. Now they zap your blog. There are rumors that Motorola CTO Padmasree Warrior had resigned and was leaving the beleaguered mobile phone maker. Well, those rumors must be true. Suddenly all the entires on her popular blog have been zapped. And if you try and go there, you get redirected to a generic Motorola page.
T-Mobile Will Swap Faulty Sidekick Slide for Sidekick LX
T-Mobile launched the new Sidekick Slide earlier this month amid much fanfare, only to discover some major design flaws that got the device to reset itself. That really charged up the customers.
The Motorola-made device from Danger Inc. was quickly pulled from the market. T-Mobile today announced that Motorola (MOT) has identified the problem as an “issue relating to the battery contacts.Motorola also has identified and tested a solution which it will implement for existing devices, and incorporate into newly manufactured ones.”Meanwhile, if you bought the admittedly handsome device, then T-Mobile is giving you three options: Exchange it for Sidekick LX (for no extra charge), return it and use the money towards any other phone, or just wait for the fix from Motorola.
Weekend Reader: Microsoft, Vyke, Snocap & Innovation
Microsoft Launches Unified Communications Portfolio. Jeff Raikes, President of Microsoft’s Business Division tells CNET “The era of dialing blind, the era of playing phone tag, the era of voice-mail jam…that era is ending.” Good sound byte but far from truth. Aswath rightfully points out that problem is not that of technology but of social behavior. Anyway lets sit back and watch them duke it out with Cisco Systems.
Vyke, another VoIP Client for Nokia S60 phone. The options for making VoIP calls from Nokia S60 phones with WiFi keep on increasing. Vyke is the latest to join the party. I still like Truphone.
Why CD Baby popped a Snocap. Derek Sivers, CD Baby CEO outlines why his company cut the cord with Shawn Fanning’s start-up, Snocap. It seems like a case of too much expectations from a Silicon Valley company that seems to have drink too much of its own kool aid. Sivers didn’t say that, but should have.
Jim Robbins, former CEO of Cox passes away.
Life imitates art: The bizzare saga around the death of Seth Tobian, a hedge fund manager who often appeared on CNBC. He was found dead last month in his pool in Florida. It was then said, it was a heart attack. But now seems like foul play.
Who’s an innovator? Motorola CTO Padmasree Warrior (my interview) has some thoughts on innovators and innovation on her blog. My favorite bit about her post is this bit of sage advise: Know when and what to stop doing. This is probably the hardest thing to do…it is next to impossible to get people to think about what not to do.
microsoft
motorola
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Technology-News
Camera Lights (No) Action… Moto
Update: Moto’s superbrilliant answer to the RAZR? Uh, another RAZR . . . RAZR 2. Jesus. Wonder how long were they working on that followup — a lot longer than the 5 seconds we spent when we jokingly referred to a RAZR 2.0 in the morning post. Though, it does have some nice features. The “media monster” is also the Z8. Exhale sigh of disappointment.
From earlier: Motorola’s CEO Ed Zander is set to show off new cell phones on Tuesday, likely including the “media monster” that he briefly mentioned last week. Do they need an iPhone killer, a RAZR 2.0, or just a compelling mobile device? We’d pencil in ‘D’ for all of the above.
One of the devices will likely be a movie-playing — 30-frames per second — device with removable storage cards which can hold feature length films. Om and I met with Motorola CTO Padmasree Warrior last week and she said the company had been in Hollywood the week before striking deals with movie studios like Universal (more interview details from Om later on).
Placing a bet on feature-length films and long form mobile video content, seems like a pretty clear shot at Apple’s iPhone and iPod franchise, as well as Nokia’s recent emphasis on the high-end multi media converged mobile device. But how can a recently beleagured Moto top the iPhone buzz — even Roy is planning on getting one.
Even worse for Moto, Nokia said yesterday that its market share will rise in the second quarter, pushing its stock up, and widening the gap between the two. And by now everyone’s heard the Carl Icahn (failed for now) saga and Ed Zander’s struggles.
Barron’s even wonders if Nortel’s CEO (and former contender for Moto CEO) Mike Zafirovski would have been a better fit to fight this battle. Ouch. Listen to Zander himself at 10AM eastern for the company’s ‘big’ announcement.
As the Moto turns
As a kid my after-school sitter was the outlandish and catty plotlines of daytime soaps — Days of Our Lives, As the World Turns, and the like (latchkey kids unite). Now after reading the latest on Motorola’s fall from grace and recent anti-Zander comments from Carl Icahn, the plotline of the handset maker’s struggles is straight off a catfight-filled soap opera copy desk. Maybe Moto CEO Ed Zander will be replaced next season by a long-lost twin who’s actually a cyborg.
In a full page page ad in the Wall Street Journal Carl Icahn calls Motorola “troubled” and says it has “stumbled badly” — all part of Icahn’s plan to capture a Moto board seat. In the letter Icahn also attacks a reported comment from Ed Zander that he loves his job, but hates his carrier customers, and calls Zander’s comment “something straight out of Alice in Wonderland.”
Activist investor Icahn is no stranger to controversy, but increasingly Zander is being painted more like the Mad Hatter. To a large extent by mad investors, that is. The Wall Street Journal posted a long piece about Zander’s role in Moto’s decline this weekend. The gist is that under Zander’s lead Motorola’s relied on the success of the RAZR for far too long and left itself hanging with no followup act. Nothing that is suprising to our readers.
The article chronicles the Motorola employees that left as Zander led the ship astray, like Ron Garriques and Mike Zafirovski. now CEO of Nortel. The talk in Silicon Valley is that Zander received a lot of unwarranted praise for his role in promoting the RAZR, and his lack of product vision is only now being demonstrated after the shine of the RAZR has worn off.
Moto, dumping some inventory?
Following a rather weak first quarter earnings report and a dismal outlook, some feared that Motorola was going to start dumping excess inventory and into the market, and start aggressive discounting. Apparently that might have started already.
SMS Text News reports that Orange is doing brisk sales on Moto. Why? Free phones with new accounts, and around $60 for upgrades. In the US, with the exception of KRZR most of the Moto phones are being offered at ridiculously low prices for new customers, especially at Cingular.
Will this lead to follow-on discounting from other phone makers, thus creating a whole new mobile handset problem?
Motorola may buy Terayon
The sweet irony - cable modem shipments are hitting a new record - and one of the early cable modem pioneers is being sold like a purple velvet jacket from the 1960s only Austin Powers would love.
Motorola, it seems has won the bid for Terayon and will pay between $2 and $2.25 a share, valuing one of the early cable broadband players between $155-to-$175 million. Cisco and Harmonic were considered to be bidding for the cable gear maker that had some run-ins with the SEC.
Good reminder for all those who are entrepreneurs amongst us - no matter how hot a start-up you might be today, it takes less than a decade to go from headline to being a mere footnote in technology history!
A Problem of Plenty?
Earlier this morning, Nokia announced its quarterly earnings, and the analysts celebrated the fact that the Finnish giant sold 91.1 million phones, putting some serious distance between itself and the beleaguered Motorola. That’s a gain of 21 percent when compared with the first quarter of 2006. And yet, the profits declined by 6.6%, as the new phone sales came from emerging markets where people prefer budget phones, and not the multimedia computers.
Similarly, Seagate, the Scotts Valley, Calif.-based disk drive maker saw its revenues grow, but profits tanked. “Seagate just delivered the industry’s first $3 billion quarter, and 30% growth over our year-ago quarter,” said Bill Watkins, Seagate’s chief executive officer. And yet the profits declined 22 percent.
Do you think that this peculiar problem of plenty - where the market share growth isn’t translating into profits - is peculiar to Nokia and Seagate or do you think this is a more widespread malaise?
Moto still tripping over phones
Motorola CEO Ed Zander has been calling the company’s handset results “unacceptable,” with a pledge to improve performance. But it looks like it’s going to take several quarters to try to fix the problem. The company posted first quarter sales of $9.43 billion - close to its previous forecast — but lower than the first quarter of 2006, and a net loss of $181 million.
Moto’s wings got clipped by the handset business. Motorola’s mobile devices division brought in $5.4 billion in sales, down 15 percent compared with the year-ago quarter, and an operating loss of $231 million, compared with operating earnings of $701 million in the year-ago quarter. Blame it on the profitless prosperity of cheap phones, and over reliance on the RAZR.
Mark Sue from RBC says:
It’s got to stop getting worse before it gets better and we’re looking for another bumpy ride in 2Q as channel inventories clear and Motorola adjusts its mobile devices business model.
Motorola says it expects a “gradual recovery” in the mobile devices division starting in the second half and expects to be profitable for the full year.
Not that we are surprised at the results - Motorola does okay for a couple of quarters, press applauds and then the sky falls. Its like an iPod set on repeat-playback mode.
Seeking Alpha points out: “the company managed to end the quarter with higher inventory than when it began. That, in turn, sounds like a recipe for further discounting and more trouble for the entire wireless sector.” True dat.
Why Apple shifted coders to iPhone
Anyone looking for proof of the strategic importance of iPhone to Apple doesn’t have to look beyond Apple’s press release page — the company is delaying the next version of its Operating System, code-named Leopard, by four months, and instead shifting resources to iPhone, now slated for late June 2007 release.
The press release issued by Apple points to a weak link in Steve Jobs’ grand design for global digital domination: not enough minions.
However, iPhone contains the most sophisticated software ever shipped on a mobile device, and finishing it on time has not come without a price — we had to borrow some key software engineering and QA resources from our Mac OS X team, and as a result we will not be able to release Leopard at our Worldwide Developers Conference in early June as planned.
The future of Apple is devices. Non-computing consumer electronic type devices are much less powerful than traditional computers, and need programmers who are thrifty in their code and skillful enough to squeeze the very last pico-hertz of performance out of lower-power embedded processors.
It is even more important in the mobile phone world, where poorly written code could simply negate the best efforts of hardware engineers. Apple doesn’t want to do that — it has a beautiful device, with an elegant user interface. However, lethargic applications and poor battery life could destroy user experience and chill the demand for even the hottest phone on the market. Apple historically has been home to coders who squeezed every drop out of those low-powered Motorola chips.
Typically, OS upgrades have provided a financial boost to the company’s profit margins, but this shuffle indicated that Apple is glad to forego those profits and instead opt for its next big cash cow - iPhone.
Now we can smirk, and point to the fact, Apple did drop Computer from its name after all.
PS: This delay should stop those Vista-delay jokes, because those who live in glass houses don’t throw stones.
Photo by Niall Kennedy via Flickr.
RAZR cuts are deep for Moto
Motorola needs to get someone to write a book about them, outlining their successes and their mistakes. And devote an entire chapter on why they shouldn’t rely on a single product too much. Remember the Startec? Well that phone sold like mad, and then suddenly it didn’t and Motorola stock swooned.
History is repeating itself with RAZR, which has been milked to death, and the sales have just nose-dived, which is why the company is reporting losses and is bracing for dismal times ahead.
Motorola is now lowering its sales from previously announced (January 2007) estimates of between $10.4 billion and $10.6 billion to the $9.2 billion to $9.3 billion range in the first quarter of 2007. Losses, oh yeah, they got those too. They say, they are shifting focus to beefing up margins, which despite everything that has transpired makes me believe that they will be a bidder for Palm.
“This is a fast business, very fast,” said Ed Zander, Motorola’s chief executive officer, told the Wall Street Journal. “And we just didn’t react fast enough.”
“Motorola is trying to move away from the price game for market share, but the product portfolio at the moment is lacking in the high-end and the low-end,” writes RBC Capital Markets analyst, Mark Sue. You can say that again Mark!