As news of Motorola Inc.’s joint venture with Huawei Technologies Co. Ltd. sinks in, analysts offered insights as to what the partnership means to the two companies as well as the wireless industry as a whole.
Technology Business Research’s Bill Lesieur said that the combined wireless network infrastructure product portfolio makes sense only if Huawei and Motorola can carry out a strong worldwide go-to-market strategy. But he cautioned that the deal is a band-aid for Motorola Networks as it reacts to sweeping consolidation within the telecom equipment sector, adding that, “the band-aid might not stick and could leave Motorola Networks as a casualty of the structural changes in the telecom equipment industry and the resulting new competitive environment.”
Lesieur explained that while Motorola has enjoyed great successes in its mobile-phone division, it needs to make decisions about its networks division, namely its competitive position, which ought to include plans to boost its ability to compete with L.M. Ericsson and Lucent Technologies Inc. in managed services.
“A key part of 3G deals, including IMS infrastructure and applications, is positioning as a top integrator and managed services player,” said Lesieur. “The Motorola/Huawei joint venture combination does not have these services capabilities relative to Ericsson Global Services and the combined Alcatel/Lucent Worldwide Services.”
Motorola said the joint venture is teaming up to launch an “enhanced and extensive” suite of UMTS and HSDPA infrastructure equipment to carriers. The companies said a new research and development center in Shanghai, China, is a key component of their partnership, as employees from both vendors will work to further develop UMTS-based products and services.
However, the crux of the deal appears to be that Huawei stands to gain access to Motorola’s clients and network expertise in both design and managed services, while Motorola gets to tout low-cost infrastructure equipment.
Motorola stated that it intends to contribute its services expertise in network design, deployment and integration as well as provide value-added services such as network performance, network security, network management and Operation Support Systems. Huawei is set to contribute “its dramatically increasing expertise in technology innovation, research and development.”
Huawei’s previous joint venture with Nortel Networks Ltd. to develop high-speed broadband access gear fell apart in early June without much explanation from either company, and the vendor’s deal with Motorola doesn’t instill much hope in the theory that the two will meet at the joint-venture table in the foreseeable future.
Albert Lin, telecom analyst at American Technology Research, commented that the deal between Motorola and Huawei takes the Chinese vendor out of the running to do a deal with Nortel “more than any other factor,” even though he seriously doubts that the Huawei deal will result in significant infrastructure profit improvements for Motorola.
“With no financial details and only a nebulous roadmap of how R&D will be shared in China, we see the Huawei deal as being of little help to Motorola’s profits and more of a business maneuver to shut out an option for Nortel.”
But the deal should work out well for Huawei, as Lin said its deal with Motorola provides “a free call option to look at Motorola’s customer list.”
In other news, Motorola said it’s adding video-on-demand technology developer Broadbus Technologies Inc. to its portfolio, extending its line of “Seamless Video Anywhere” solutions.
Motorola explained that Broadbus Technologies’ suite of solutions enables distribution of on-demand content to consumers through multiple devices, and its solid-state server architecture is based on the configuration and management of random-access memory. As a result, Motorola said that the platform can use less space and power than traditional hard-disk based technology.
The acquisition gives Motorola an opportunity to address the growing demand for mobile video, video on-demand, time-shifted TV, network-based digital video recording, on-demand ad insertion and switched digital video, the company said.
“Today, consumers expect to access video entertainment on the different devices they have, inside and outside of their home, in varying format-and to have it available upon request,” said Dan Moloney, president of connected home solutions at Motorola.
Broadbus Technologies counts more than 60 video-on-demand deployments with service providers across the globe, including Comcast, Charter Communications, and Time Warner Cable. Key financial investors included Battery Ventures, Charles River Ventures, Comcast Interactive Capital and Star Ventures.
Though financial terms of the agreement to acquire privately held Broadbus were not disclosed, Motorola said it expects the transaction to close in the third quarter.
WiMAX trial in Tokyo
Motorola also announced that it’s supplying end-to-end gear for Softbank’s WiMAX trial in Tokyo. At its analyst meeting in Chicago, Greg Brown, head of Motorola’s newly formed Networks and Enterprise division, said Motorola had to go outside the U.S. to trial its WiMAX equipment since “it’s not happening here fast enough.”
Brown also noted that WiMAX is one of 10 “big bets” Motorola is making on disruptive technologies, explaining that he expects WiMAX networks to be ubiquitous by the end of the decade.
