Motorola enjoyed record success in 2005 with the release of
the RAZR, which went on to sell 110 million units and boost the company to the
number two position in handsets behind Nokia. Since that time, Motorola
has struggled to match this epic success.
Motorola first tried to boost sales in 2006 by cutting
prices, which led to a sharp drop in profits. This in turn led to
"cost-savings" in 2007, which basically equated to closing hardware
and software development locations and cutting
jobs.
In Q4 2007, Motorola closed the year with a $1.2 billion USD loss. The
company's handset share also sunk in 2007 from 23% to a meager 13%.
Now there are reports that Motorola may be looking to cut its losses and leave
the handset market entirely. This would leave an uncertain fate for the
company's more popular lines such as the new RAZR and the
Sidekick. These products and their engineering and support staff
could be sold off to competitors or simply reassigned to different projects,
keeping only a bare minimum for product support.
If Motorola exits the headset business, it will likely focus on becoming a
government and enterprise company, said Richard Windsor, an analyst with
Nomura International in a note to his clients released Tuesday.
There is also separate speculation that a Chinese buyout of the Illinois-based
Motorola is forthcoming, but Windsor says this is unlikely. He says that
Chinese vendors do not have the expertise needed to deal with Motorola's
software, hardware, and marketing woes, so both sides may be reticent to make a
deal.
Motorola currently offers several competitive music phone-related headphone
products, featured in last
year's Holiday Guide at DailyTech. These lines also share an
uncertain fate if the handset business is phased out.
Motorola is also involved heavily in the microprocessor, embedded computing,
two-way radio, and networking markets. Motorola was previously involved
in the government sector, until 2001 when it sold off its defense
holdings to General Dynamics.