CHICAGO-Motorola Inc. used its annual analyst meeting here to paint a portrait of itself as a sleek, lean, high-tech firm with plans to sit alongside such well-known consumer brands as Apple Computer Inc. and Nike Inc. And to verify its progress, Motorola released a BlackBerry-style smart phone and a new WiMAX product and offered insight into its revamped corporate structure.
Most analysts appeared satisfied with the company’s progress. Motorola has scored a series of upgrades during the past several weeks, and its stock price has been trending up since May. It hovered around $21 per share Friday.
“It’s been a really good year,” said Ed Zander, Motorola’s chief executive officer. “This is not a cell-phone company. This is a full-service mobile communications corporation. We really are reinventing the company.”
Since taking the reins last year, Zander has ridden a wave of positive sentiment on Wall Street. During his tenure, Motorola has shaken off its sedentary image with its popular Razr phone and a series of strong quarters. Indeed, the company posted a record second quarter with gains in profitability and mobile-phone market share.
Zander said Motorola is no longer a hardware vendor; the company employs twice as many software engineers as hardware engineers. Further, the company will continue to invest significant resources in research and development, he said. In the second quarter, the company spent $851 million on R&D.
However, Zander said Motorola would stay away from major mergers and acquisitions and instead would focus its energy on small, pointed purchases that would add to its intellectual property portfolio.
“I think they’re messy” and usually don’t end up as expected, Zander said of such large transactions.
Finally, Zander and other Motorola executives offered insight into the company’s reworked corporate structure. Instead of running four independent businesses-phones, infrastructure, home networking and government-the company is now transitioning to a more integrated structure. Stuart Reed, recently hired to rework Motorola’s global supply chain, promised to provide significant savings by reusing the same suppliers across various businesses, as well as reducing the number of the company’s suppliers. Reed said Motorola also would restructure its information technology operations, outsource where appropriate, and develop a standard approach to product quality.
“Motorola does not have a best-in-class supply chain,” he said, promising to change that by the end of next year.
Specifically for mobile phones, which comprise almost half of the company’s revenues, Motorola said it would rely on only three main chip suppliers-Qualcomm Inc. for CDMA chips, Freescale Semiconductor Inc. for GSM and W-CDMA chips, and Texas Instruments Inc. for chips for low-end phones. Ron Garriques, head of Motorola’s phone business, said the company conducted a rigorous bidding process to determine its three main suppliers. However, he said the agreements are not set in stone.
“Can those things change? Sure,” he said.
Garriques also said Motorola is working to reduce the number of separate components it must buy for its phones. He said the company already has reduced its component count from 300,000 to less than 100,000, and the company’s goal is to use 25,000 unique components.
Motorola is working to catch Nokia Corp. on the handset front. Nokia has long relied on a streamlined supply chain and standard manufacturing process to churn out inexpensive phones.
During his presentation, Garriques offered details on the phones that are set to succeed the company’s popular Razr device, which was released late last year. He said the company would release its Slvr phones in the fourth quarter of this year. The super-slim candybar-style phones will ship in low-, mid- and high-tier versions. Further, the company also expects to release its anticipated Pebl clamshell-style phone in the third quarter of this year.
Garriques used the platform to introduce Motorola’s new Q smart-phone device. The device, featuring the slim styling of the company’s popular Razr phone, includes a tiny, Qwerty keyboard, Bluetooth, a 1.3-megapixel camera and Microsoft Inc.’s Windows Mobile 5.0 operating system. It is scheduled to sell in the first quarter of next year.
Information and pictures of the device previously had been posted on various Web sites, but Motorola used its analyst conference to formally announce the gadget. The device will run up against Research In Motion Ltd.’s BlackBerry device and Palm Inc.’s Treo smart phone in the enterprise market. The Treo runs the Palm OS, and the BlackBerry runs RIM’s Java-based OS.
Although Motorola executives trumpeted the Q, Zander acknowledged the continued absence of the company’s forthcoming iTunes device. “It’s real, and it’s happening,” Zander said of the device.
Motorola, along with Apple and unnamed wireless carriers, plans to unveil the device sometime in the next two months. Zander said the device warranted its own event.
Motorola announced a partnership last year with Apple to make an iTunes phone.
As for Motorola’s infrastructure business, the company showed its new Moto Wi4 product portfolio of WiMAX solutions. Although somewhat short on details, Motorola promised to support fixed and mobile WiMAX with small, inexpensive base stations, smart antenna technology and multimedia handsets.
Motorola also announced a slew of news related to its other businesses. Among the announcements:
- Alltel Corp. plans to roll out Motorola’s CDMA 1x EV-DO solution later this year.
- Smart Communications in the Philippines signed a multimillion-dollar deal to use Motorola’s Canopy platform to deliver broadband services. It is Motorola’s largest Canopy equipment contract to date.
