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Gadgets Report: Motorola May Leave Handset Business
Jason Mick (Blog) - January 29, 2008 10:18 AM
Print E-mail del.icio.us 51 comment(s) - last by guacamojo.. on Jan 30 at 3:54 PM
New reports indicate that Motorola may be leaving the mobile phone industry and/or may be bought by Chinese investors

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.

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Not good
By FITCamaro on 1/29/2008 11:05:07 AM , Rating: 3
Yes thats what we need. Yet another American company possibly selling out to the Chinese. Motorola could just try to compete with good phones. My current cell phone is a Motorola. It's not a bad phone but its just under 2 years old and I can't talk on it for more than 5-10 minutes in a day before the battery starts beeping at me that it needs to be charged.

I know people with 10 year old Motorola phones that still work great and the battery lasts days. You know, back before the race to create phones that fit inside your nostril started. The Juke is close.




RE: Not good
By retrospooty on 1/29/08, Rating: -1
RE: Not good
By GreenyMP on 1/29/2008 11:35:01 AM , Rating: 5
Are you advocating that keynesian economics would reduce deals with China? (I think that the Clintons would disagree with you.) Or are you just spewing trash that you know nothing about?


RE: Not good
By retrospooty on 1/29/08, Rating: 0
RE: Not good
By eye smite on 1/29/2008 12:03:30 PM , Rating: 3
What you're saying about Republicans may be true, but as I recall, it was Clinton that badly twisted and got NAFTA in place. Then as time went on he removed laws that protected american workers and industry by allowing companies to move overseas with little or no penalties. Basically they can escape taxation on products produced by making them somewhere else.The sweat shops in Mexico, South America, India and China owned and run by Walmart are a fine example of that. But hey, that was all Clintons idea of making us part of the World Economy and doing away with our identity as America.


RE: Not good
By GreenyMP on 1/29/2008 12:08:19 PM , Rating: 4
And just think, you could have all of that all over again by simply checking the box.

[x] Hillary


RE: Not good
By judasmachine on 1/29/08, Rating: 0
RE: Not good
By FITCamaro on 1/29/2008 4:39:57 PM , Rating: 4
Ron Paul cares about nothing other than the America worker. Hence his extremely isolationist views when it comes to foreign policy and his desire to withdraw from all the free trade agreements we've signed(which I agree with). If anything he's too isolationist.


RE: Not good
By Zoomer on 1/29/08, Rating: 0
RE: Not good
By Machinegear on 1/30/2008 12:16:29 PM , Rating: 2
quote:
Ron Paul cares about nothing other than the America worker.


I looked him up on his campaign website and he has concerns on many issues that face Americans. You are making a huge assumption with your statement that can be easily proven as incorrect. You can see the litany of issues Ron Paul has concerns with via his campaign website.

I would also like to say from a personal standpoint I wish we had a President who "cares about nothing other than the American worker." That would be a positive change.

quote:
Hence his extremely isolationist views when it comes to foreign policy...


Words have meaning. I will help you with your word definitions:

Isolationist - a national policy of abstaining from political or economic relations with other countries.

Noninterventionalist - abstention by a nation from interference in the affairs of other nations or in those of its own political subdivisions.

Ron Paul has stated over and over again in televised debates and online articles he is a noninterventionalist. To not know at this point is to be willfully ignorant or malicious.

quote:
..and his desire to withdraw from all the free trade agreements we've signed(which I agree with).


To call NAFTA, CAFTA, etc. "free trade" is self deception. They are "managed trade" agreements marketed to the masses as "free trade." After reading a couple of these "free trade" agreements it becomes glaringly obvious they aren't. I suggest everyone take a look. Most of them are posted online, and one google search away.

quote:
If anything he's too isolationist.


This sentence is odd. Can one just be a tad isolationist and be OK? Isolationism is absolute in its very nature. Regardless, Ron Paul has stated he believes in noninterventionalism. Why? Because that is what our forefathers, especially George Washington, encouraged us to do.


RE: Not good
By retrospooty on 1/29/2008 6:14:26 PM , Rating: 1
Umm, sorry, that mass exodus all started WAY before Clinton and Nafta.


RE: Not good
By ksherman on 1/29/2008 12:07:56 PM , Rating: 3
So your spewing trash?

Corporations exist to make a profit, that is their primary function. The government should not me meddeling that deeply, or at all really, in the affairs of a buisness. Collect taxes, prevent monopolies as best as they can, maybe regulate a minimum wage, sure.

To meddle much more beyond that will ONLY serve to push MORE corporations to move overseas.


RE: Not good
By retrospooty on 1/29/2008 6:17:01 PM , Rating: 1
Agreed... Out govt should stay out, way out. What they HAVE done is give huge tax breaks and incentives to corporations, and have done zero to stop outsourcing.


RE: Not good
By eyebeeemmpawn on 1/29/2008 12:14:55 PM , Rating: 1
Speaking of corporate friendly rules, check out this site.

http://www.closetheenronloophole.com

Essentially, Enron is partially to blame for the incredibly high fuel prices we're seeing these days. They lobbied to have the federal regulation removed from energy commodity trading. This opened the door for the price manipulation that we're seeing today.

I was told that $1 of the price of every gallon of liquid fuel sold in the US goes directly to Oil Speculators.


RE: Not good
By Chaser on 1/29/2008 12:21:37 PM , Rating: 3
And what democratic Presidential policies or endorsed legislation have encouraged corporations to stay? From what the Democrats are saying they do not intend to renew the "Bush" tax cuts. You know those cuts for the rich and those evil fat cat corporations only?

I'm sure that will be a good step towards keeping corporations here.


RE: Not good
By FITCamaro on 1/29/2008 1:05:33 PM , Rating: 2
Exactly. While yes corporate tax cuts might seem like the government playing ball to big corporations, they KEEP jobs in America because then the corporations taxes are lower and they spend less. Thus they can afford to keep hiring here in America.

The Democrats plans will kill jobs here in America. Hillary and Obama wanting to heavily tax big oil seems like a good idea. What will it actually cause? Me and you paying more for gas while seeing no benefit. At least those of us who pay taxes. They want to establish bigger government healthcare programs. What will that do? Possibly drive a lot of independent companies out of business (lost jobs) and tax the middle class even more for coverage we won't even use. Hillary wants to give $10,000 to every mom for every child she has. What will that do? Encourage poor people to have more kids and to do it cheaply so they can pocket that money.

Yes the Democrats are a great answer. Hell even this 'economic stimulus' package. I don't even think it should exist. But its going to happen and its ridiculous that the original plan got shot down by the Democrats. Instead we get a package where people who don't even pay taxes will get a "refund" (more like more welfare) and those who do pay taxes end up getting less. If you don't pay anything in to the system, you sure as hell don't deserve to get anything out when there's a "refund". That's like expecting to get the mail-in rebate on a product you didn't even buy.


RE: Not good
By PandaBear on 1/29/2008 2:42:49 PM , Rating: 2
Remember, tax have to be from someone, so if they don't tax the big oil then it will tax other businesses or worse the individual tax payer.

So is it going to save job by taxing the big oil? I would say yes, even if that means gas price goes up.


RE: Not good
By Darnell021 on 1/29/2008 2:54:15 PM , Rating: 2
I generally agree with your comments FIT, and maybe this time its just that I'm young and naive. However, coming from a hugely liberal family in Massachusetts(a true cliche I know), I just cannot understand why the rich and successful need these tax breaks. You said American corporations need these in order to "keep" jobs in America. But I cannot see taxing Exxon-Mobile Wal-Mart etc. more money as running jobs out of the states, it shouldn't. Couldn't we cut taxes for the poorer-middle classes instead to create profitability and growth for smaller independent companies?


RE: Not good
By FITCamaro on 1/29/2008 4:06:32 PM , Rating: 2
I'm not in favor of tax breaks for big oil companies because no, they don't need the money. They make billions a quarter in profits. But in the end, yes, they are greedy corporations and any extra they get charged just gets passed on to us. And no, them not paying the taxes doesn't mean we will.


RE: Not good
By FITCamaro on 1/29/2008 4:25:10 PM , Rating: 2
And cutting the taxes on the middle class is exactly many of the republicans want to do. However that will also cut the taxes on the wealthy. So then the Democrats scream that "oh you're favoring the wealthy" and "you gave a bigger tax cut to the rich than the poor". Well of course the rich will have a bigger tax cut. They make more money so even a 1% tax cut to them means a lot more than the same percentage cut to the poor. Does that mean they shouldn't get it? Things should be fair. There's a lot of wealthy people who live here in America because of our comparatively cheaper taxes. Take that away and they'll take their money elsewhere.

It's also hard to cut other taxes besides the income tax, such as the capitol gains tax, that won't benefit the wealthy in addition to more average folk. Yes it helps them but it also, more importantly, helps us. You can't have rules on something like that where "Hey. You make a million a year. You have to pay a higher capitol gains tax". That's unfair.

That's why I'm in favor of a flat tax where everyone pays the same rate or a fair tax where you're taxed on the goods you buy (with some exceptions). Of course the downsides of a fair tax on goods would likely mean internet purchases would be far more susceptible to being taxed. And it might discourage some from buying higher dollar items.

It would kind of suck to have to pay a 15-20% tax, on top of any state and local taxes, on a new $30,000 car since it would immediately add $4500-6000 to the cost of the vehicle. Yeah you're not paying any federal taxes but people don't like it when the immediate cost of something is higher. Sort of like the $19989 sounding cheaper than $20000 thing.


RE: Not good
By Serafina on 1/29/08, Rating: -1
RE: Not good
By FITCamaro on 1/29/2008 4:12:41 PM , Rating: 2
What does product quality have to do with tax cuts? It's not a matter of the government rescuing these companies. I hardly think the oil companies need rescuing. It's a matter of by making it cheaper for the corporations to operate here in America, you stop them from having as much incentive to move overseas where the cost of business may be lower.


RE: Not good
By larcen007 on 1/29/2008 5:56:53 PM , Rating: 2
Fit - the bad news is you are still a retard (i mean it in a nice way). The good news is, so are the liberals here. The problem of "corporate taxation" is really a myth. Just look at your 1040 instruction from IRS where they disclose where money is coming from.

According to the IRS, 13% of federal income come from taxing corporations, 39% came from income tax, and 32% from "retirement" taxes. Most BIG corproations do not pay tax. Why? Its really simple - they are big enough to take advantage of federal and international tax laws. Believe it or not, the US has one of the better pro-business corporate tax systems for an industrialized nation (emphasis on industrialized).

There are other business reasons for moving - and the obvious answer is production costs - by having a higher standard of living, companies need to pay more for employees here than in China. Trade agreements, as they currently are, are bad for workers and good for huge business.

Also, in that same 1040 instruction booklet, there is a page of equations that basically determines tax brackets (check pages 86 and 87). Your income determines where you are in the bracket.

Also, a flat tax would never work (unless maybe you like a completely socialist system). The problem lies with the cost of goods. I use more percentage of my income (say 10% per month) to pay for a car than a wealthy person does (say 1% per month). For a flat tax to be successful, there would have to be a flat rate for everything, including goods - 20% goes to the big brother, 10% goes to the big business #1, 5% goes to big business #2, etc. Our "staggered" tax rate tries to make up for these inequities.

The US tax system is a beast, and it cannot be explained by liberal or conservative rhetoric. It would take me hours to sort out the rhetoric used today and correct all the misconceptions. Most of the rhetoric is inacurrate or just plain wrong.


RE: Not good
By FITCamaro on 1/29/2008 9:29:22 PM , Rating: 2
quote:
There are other business reasons for moving - and the obvious answer is production costs - by having a higher standard of living, companies need to pay more for employees here than in China. Trade agreements, as they currently are, are bad for workers and good for huge business.


Sounds like what I said.


RE: Not good
By Arribajuan on 1/29/2008 11:24:17 AM , Rating: 3
"Motorola could just try to compete with good phones."

They tried and failed... that is why they are leaving the business.

Current batteries on most electronics last for 2 - 3 years. This happens with cellphones, ipods, laptops, etc.

That is the price we pay for wanting smaller, fancier phones. And this i not Motorola's fault. The race to create phones that fit inside your nostril was started by consumers buying the smaller phones and ditching the brick ones.

It is sad to see a company division fall, but that is what happens when you have crappy products.

By the way, I have also used Motorola phones and have nothing good to say about it other than it was very cheap.


RE: Not good
By Serafina on 1/29/08, Rating: -1
RE: Not good
By eye smite on 1/29/2008 12:07:12 PM , Rating: 1
I'll agree with you that individualism is taken to extremes in Americans and holding with ideals that made this country what it is are pretty much ignored and considered antiquated. However you cannot lay this at Bush's feet, this whole trend of " it's all about me" started back in the 90s with Bill Clinton. Catch the clue train when it comes by.


RE: Not good
By ksherman on 1/29/2008 12:09:31 PM , Rating: 2
What he said.


RE: Not good
By cochy on 1/29/2008 12:10:17 PM , Rating: 2
Would certainly be sad to see a pioneer in the mobile phone industry throw in the white towel.


RE: Not good
By Oregonian2 on 1/29/2008 2:33:56 PM , Rating: 2
Note that it's not Motorola the company that might throw in the towel, the company as a whole still had a net income of $100 Million for the quarter on sales of nearly $10 Billion. It's just that the handset division had lost about $400 Million, which had put a pretty good dent in what the total would have been without them (they're about half the gross revenue). The rest of Motorola has been propping up the mobile phone division.

http://tinyurl.com/yodv42


RE: Not good
By Oregonian2 on 1/29/2008 1:55:00 PM , Rating: 2
You might want to spend $5~10 for a new battery, which you can replace yoruself (unlike Apple where they charge you a LOT and you have to send it in only to be sent back someone else's phone which they had already opened up (overseas)).


Lack of Innovation
By Trisagion on 1/29/2008 11:02:46 AM , Rating: 2
Motorola's problem is that they failed to innovate and capitalize on the success of the Razr. It's crappy UI and VGA camera might have been ok at the time, but became quickly outdated with the intro of megapixel cams.

First mistake: They got complacent. The mobile phone industry is like the computer industry in development. New phones with new features come out all the time. Motorola thought people would buy the Razr based on the shape and size alone. By the time they realized the problem and brought out the V3i and the Razr 2, it was too late.

My sister has the Razr and my dad has the V3i, both have battery issues.

I've had the SE W800i for 2 years now without a single problem to date. It still has features that are comparable to phones coming out today.

Sony Ericsson FTW.




RE: Lack of Innovation
By nayy on 1/29/2008 11:48:23 AM , Rating: 2
quote:
The mobile phone industry is like the computer industry in development. New phones with new features come out all the time.


quote:
I've had the SE W800i for 2 years now without a single problem to date. It still has features that are comparable to phones coming out today


I'm confused, you think that they are evolving quickly or that they are basically the same they where two years ago??.

I'm more inclined to believe the latter, i feel last few years have been more about design than about new features. Wifi, gps, multimedia, touchscreen and push-mail(the last great new feature if you ask me), they all have been available for a while.
I have been wanting to change my HTC 8125 for a while but there isn't anything out there that i would consider a significant upgrade over my phone :(

The iphone is not for me, but i have to give it to Apple, it is the most significant "innovation" of the industry in the last couple years. I just hope that other companies start making some real progress of their own.


RE: Lack of Innovation
By FITCamaro on 1/29/2008 1:07:30 PM , Rating: 1
Sony Ericson phones are made by Nokia (either them or Motorola, forget which) because Sony couldn't produce a good phone to save their life.


RE: Lack of Innovation
By Serafina on 1/29/08, Rating: -1
RE: Lack of Innovation
By FITCamaro on 1/29/2008 4:37:33 PM , Rating: 1
Yes and you probably smoke crack and live off welfare. I can call you names too.

Fact is, I saw an article a few years back about how, due to poor sales, Sony Ericsson was going to have another company design its phones. Now, maybe things have changed. But that was the last I heard of it.

And I own Sony products. I have both a Cybershot camera and a PSP. I'll eventually be getting a PS3 when I deem it worth the money.

I do believe that many Sony products are overpriced and similarly featured compared to the competitors though. Things like their home theater systems are extremely poor with them usually featuring built in, fixed length, crappy wires for the speakers instead of letting you buy higher quality wire to use and cut it to the length needed. Yamaha's systems are far better and less expensive if not quite as sleek. Their computers are also mostly overpriced and under-featured compared to others. Their TVs are good but again, you can usually find a similarly featured model from other manufacturers for less money.


RE: Lack of Innovation
By Eri Hyva on 1/29/2008 5:33:00 PM , Rating: 2
That is totally false.

Sony did try to do mobile phones back in 1990's, like Swedish Ericsson (each getting 5-10% market share). They were both greatly dominated by Finnish Nokia. Ericsson went almost bankrupt in the battle against Nokia, so Sony Mobile Phones and Ericsson Mobile Phones joined forces in 2001. SE manufactures it's own phones.


They only have themselves to blame...
By GTaudiophile on 1/29/2008 1:00:16 PM , Rating: 2
I agree with others here that Motorola shot themselves in the foot. They should have built on the success of the first RAZR. They should have paid attention to customer reaction, and then instead of continuing to spit out essentially the same phone with cosmetic changes, they should have completely overhauled the UI and updated internal components and features, all within 6-12 months of the first phone's release. (I had a V330 before my current Sony Ericsson and the UI was just archaic.) They chose not to listen to their customers nor innovate on time, and now they will suffer for it. And the USA will lose its only competitor in the cellphone market (unless you consider Apple to be fighting in the same industry).




RE: They only have themselves to blame...
By Oregonian2 on 1/29/2008 1:53:15 PM , Rating: 2
Well, Motorola has a major problem that Apple doesn't have. Motorola has tried to maintain their U.S. manufacturing as well as other high cost factories (my Motorola KRZR says "made in Germany" in it). Apple and others have moved their manufacturing to China -- so what they can do for the same selling price is higher.


By guacamojo on 1/30/2008 3:54:04 PM , Rating: 2
quote:
Motorola has tried to maintain their U.S. manufacturing


I don't think so. I have a 2 year old V3C that was made in China. Pretty much all of the big players manufacture globally, with the bulk of the manufacturing in China.

I think Moto just couldn't compete on innovation. The RAZR was the hot phone when it came out. What have they done since? Pink RAZR? The handset business is pretty cutthroat, and the margins just aren't great if you're not at the top (hello, iPhone).

Still, I'll be sorry to see them go. They didn't always have the best phones, but they offered a choice. I actually like the V3C. It's not a bad phone for my needs, and the price was decent.


Title incorrect
By nglessner on 1/29/2008 10:38:21 AM , Rating: 4
Handset != Headset




What they need
By ionoxx on 1/29/2008 11:52:10 AM , Rating: 2
They need to go back a few steps. I have a RAZR V3T right now. It's a good phone! BUT, my good of V60i was a bullet proof phone that my mom still uses. They need to make a phone like the V60 that was indestructable. I've dropped on concrete several times, and the metal shell is still in great shape! This phone even survived a swim in a toilet!




RE: What they need
By napalmjack on 1/29/2008 12:43:10 PM , Rating: 2
Absolutely. Loved and still miss my V60i.


hmmm
By DeepBlue1975 on 1/29/2008 11:54:20 AM , Rating: 2
Motorola was really heart by the fact that other brands entered the market when Motorola was partying about their razr success: samsung and lg for example.

I name those because they are the two brands that offer basically the same that motorola does: good looking phones with no special other special application in mind.

SE has the more music oriented market in mind, in which nokia tries to compete and more or less does well.

Nokia capitalizes well on the more profitable smartphone market, which isn't almost exploited by neither motorola or SE, not to talk about samsung or LG which, I believe, don't offer any smartphone.

I had 2 motorolas, the c650 being the latest one 3 years ago, and it was a great small phone with a great interface.

Shame on motorola for not having been able to keep improving their products and/or capitalizing on the great and friendly interfaces their phones almost always had (paradoxically, except for the original razr v3 which had a really awful interface IMO).




RE: hmmm
By Shlong on 1/29/2008 12:05:29 PM , Rating: 2
LG has the enV, Prada, & Voyager. Samsung has the Blackjack I & II, i300, i760, i718.


Never had a problem
By Shlong on 1/29/2008 11:50:04 AM , Rating: 2
I never had a problem with their phones, I've had the V180/V600/RAZR/KRZR/RIZR and they all worked pretty good except the RAZR would randomly freeze up to a white screen now & then (monsterpack firmware fixed it). There phones were lacking in UI but they've gotten better, I tested out the RAZR2 and the UI looked pretty nice. But Motorola needs to stop making Cable Boxes, I've had nothing but problems with their cable boxes for Comcast.




Sidekicks are made by Sharp
By Flunk on 1/29/2008 12:34:24 PM , Rating: 2
All of the recent T-Mobile Sidekick models are made by Sharp Electronics, not Motorola. Even the linked Dailytech article mentions this.

http://en.wikipedia.org/wiki/T-Mobile_Sidekick




gRazr
By EntreHoras on 1/29/2008 3:20:24 PM , Rating: 2
This is the opportunity Google needs to have their own gPhone.

I prefer to Google to buy Motorola than some Chinese company.




Razr
By JakLee on 1/29/2008 5:44:08 PM , Rating: 2
I own a razr
I have had it for years. The battery is now starting to go & I am not going to replace it. As soon as it dies I will replace the phone & likely the plan. I have had this particular razr for almost 3 years & would like to get the razr2, but I don't like at&t's price. For $400 (and 2 year contract) I can get razr2 or Iphone. Now I am not an Iphone hater/lover but just a quick comparison on features & the Iphone sounds like a WAY better deal. I got my razr for $150+2year deal, now that my deal is up I can't find a decent at&t phone (when I got razr it was cingular.... I get to keep my rollover at least). I may end up just dropping them all together, not because of any problems with the service per ce, just because they have crummy phone prices....




Let me be the first to say
By Xodus Maximus on 1/29/2008 1:50:12 PM , Rating: 1
Goodbye Moto ;)

Seriously I dislike them quite alot, my personal rankings from experience is Samsung or Nokia first, and Kyocera second, Motorola i870(not sure of the model I have it in a box somewhere) was the phone I hated and not only because it was the only phone that ever froze on me constantly, I mean how does a phone crash, Its not like its OS is Vista with 10000 DLL's to debug, seriously.

Maybe it was the stupid naming of the phones that did them in, I suggested to them long ago to make the PHAZR and MASTRBAZR to appeal to a geekier crowd ;)




Their phone sucks
By Serafina on 1/29/08, Rating: -1
"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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