Motorola’s announcement that it would split itself into two companies — one focused on handsets and one focused on other broadband and mobile product lines, including wireless broadband and enterprise communications.
The news has spawned thousands of stories and even more opinions: Is this a good move? Is it a desperation play? Will it help Motorola regain the number 2 spot in the handset business? Currently Motorola trails number 1 Nokia as well as Samsung for global market share.
While it’s not yet clear what the proposed split will mean to investors, employees, and the market in general, Kevin Burden, Research Director, Mobile Devices at ABI Research believes the move should have been easy to see coming.
“What is clear is that a radical move needed to happen,” says Burden. “Creating a leaner and more focused unit with an improved cost structure can help fix its execution issues while also tending to attract the type of senior talent it has desperately needed.”
While it's no secret that Motorola's lack of innovation and execution has been its downfall, don't expect it to get much better while it processes the split, warns Burden. “This is going to be a tremendous distraction at a time when the firm really needs laser focus.”
Analyst Jeff Kagan believes that this is a major move in the right direction.
Asked Kagan, “Could this be the beginning of a recovery for Motorola? It will take time to occur, but it could be. This could be the start of the recovery for the company. These changes give Motorola a fighting chance again. Their ability to attract and retain good workers and executives has just increased.”
TMC’s Rich Tehrani also sees a positive angle to the news.
In a blog entry this morning, Tehrani asked, “Is this a good move for the company?"
He continued:
I think it is because Motorola is a company full of brilliant people who seem to suffer from terrible management and oodles of red tape which zap the company's synergies."
In addition, based on discussions with past Motorola employees, there seems to be a culture that is hesitant to change within the organization.
This sort of culture in the technology space can be deadly.
Splitting into two companies will not eliminate many synergies as there don't seem to be too many today. In addition, there is a chance a reduction in red tape will allow some of the talent in the company to have a greater impact on new product development and strategy.
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