Is Motorola Next on the Chopping Block? They have very little to offer any potential suitor.

by Matt Klassen on May 3, 2010

With the acquisition of the struggling Palm brand by the unexpected dark horse HP last week, speculation has grown over which mobile company will be next to be purchased in the dog-eat-dog mobile smartphone market, and it didn’t take too long to find a candidate.

Considering its intention to split its mobile division into two autonomous corporate entities, coupled with the fact that the company has been supplanted on the top-five list of worldwide smartphone sales, Motorola may just be the next company to be bought out.

But the issue for the US-based company is that while they have a significantly larger customer base then Palm ever did, they lack any significant technological innovation, meaning that it may be extremely difficult to find a suitor for Motorola’s mobile division.

Although Motorola’s Q1 reports showed a significant increase in Q1 revenues, recent market reports also indicate an unsettling 42% drop in handset sales, meaning that while the sale of the company’s more expensive smartphones is driving up revenues in comparison to last year’s dismal, recession inspired low, overall Motorola is selling far fewer devices than it did in the past.

So much so, that surprisingly Motorola has seen itself fall from the lofty heights as one of the world’s most popular mobile brands, losing its top-five market share spot to the surprisingly successful Research in Motion.  

While it’s old news that Motorola, under pressure from its investors, is working to split itself into two publicly traded companies, one handling handsets and accessories, with the other focusing on wireless broadband networks and enterprise level communication services, with the release of these 2010 Q1 mobile market reports, speculation has arisen that Motorola may in fact look to offload their handset division, but the question is, who would want it? For you see, Motorola, despite its strong customer based and its marquee lineup of powerful smartphones, has very little to offer any potential suitor.

The problem for Motorola in finding a potential buyer for its struggling mobile division is that it has really got nothing to offer. The plum for any company looking to enter into the mobile market is obvious, the draw would lie not with Motorola’s products nor with its customer base, but with its technological innovation, and the fact that Motorola has foregone the task of developing its own OS in favor of utilizing Google’s Android may, in fact, be the company’s undoing.

“I don’t think anyone would be interested in buying Motorola now,” said Frank Marsala, a research analyst at market research firm Gartner. “There’s very little intellectual property there. If they had a differentiated operating system like Palm has or their business was growing like some of its competitors that would make it much more attractive.”

In the world of smartphones, the reality is that anyone with the right connections can manufacture and sell a powerful smartphone, it’s really not that hard. The difficult thing for companies the world over is to produce a phone that has innovative and creative software, one that addresses user needs better than its competitors, and unfortunately, Motorola has nothing of the sort.

With the big players in the mobile market all sporting their own operating systems, software, and user interface, Motorola depends on Google’s Android to supply all of these things, and if they are looking to offload their mobile division, this fact will certainly hurt their chances.

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