April/May 2008

Mobile phone handsets and handheld computers from the Motorola fold could become products of two separate companies under proposals to split the electronics giant in two.

The rationale for the plan is that the handset division, ever prey to the fashion vagaries of the consumer mobile phone market, is considered to have been under-performing. Motorola sees the split as a way to refocus the handset business, which slipped from second to third place in the world market last year.

Ironically, telephone handsets and mobile computers have seen progressive convergence in recent years, and when Motorola acquired Symbol Technologies at the turn of 2006-7, there were expectations that it might exploit potential synergies between the two types of product. Symbol's MC35 PDA-style handset in particular is high on executive appeal.

On the other hand, the prospect of a split gives an extra rationale to Motorola's $3.9 billion acquisition of Symbol in 2006, since it adds a powerful strand to the mobile network operation.

Analysts are divided on the likely implications of a split, seeing short-term gains for rivals, and a continuing need for Motorola to enhance its handset offerings. However, Ovum for one concludes that the split is 'the right thing to do'.