Time to Divide and Conquer, Motorola

In the 24 hours since Motorola (NYSE: MOT  ) announced its plan to divide the company into two unequal parts, some 99 articles (at last count) have sprouted like mushrooms after a spring storm -- and that's on Yahoo! Finance alone. I shudder to think how much more ink has been spilled in the print media, and elsewhere in the blogosphere.

And yet, that 99 number entices. I just can't resist the temptation to make it an even 100. Problem is, 99 articles after the news broke, there's really precious little that's original for me to say on the subject of this latest example of corporate meiosis.

Per se
Or at least, little that's original to say about the division per se. Motorola's press release on the subject kept the details to a laconic minimum, saying little more than the following:

  • The plan is to spin off Mobile Devices as one company and keep Broadband & Mobility Solutions as a second.
  • "If consummated," the spinoff will take place in 2009.

And that was about it. Hardly much to provide fodder for 99 articles, don't you think? Especially when Motorola so clearly hedged its bets with the "if consummated" proviso, and left itself some 18 months of wiggle room to decide when, if, and if-yes-then-how to effect the spinoff before "2009" turns into 2010.

Forgive me for thinking that this all looks a bit up in the air, with more than a whiff of the hypothetical still clinging to it. And yet, 99 articles can't be wrong. Apparently, Motorola's "announcement" is an invitation for investment writers to engage in what-if scenarios.

Count me in. I can do what-if
So what if "Motorola Mobile Devices" (MMD) really does become a stand-alone company? How does it evolve from a hypothetical company that actually lost money last year into a stand-alone company that can actually earn a profit and remain in business? I've got a few ideas, and they all come down to the three key attributes that shoppers look for when buying a cell phone: style, functionality, and battery life. If MMD hopes to succeed in its newfound independence, it's going to have to get one or more of these things right.

I don't mean to be harsh, but style is Motorola's weakest link. OK, the Razr worked for a while, but raise your hand if you think Motorola really has what it takes to consistently beat Nokia (NYSE: NOK  ) on style.

OK, I see a few hands up. Let's shoot them down. Now that Motley Fool Stock Advisor pick Apple (Nasdaq: AAPL  ) has introduced its iPhone, keep your hands raised if you think Motorola can beat the coolest company on the planet on style.

Thought so. So Motorola, here's the thing. First thing out of the gate, build yourself a cell phone that people won't be embarrassed to be seen talking into. The Razr thing worked. You can use that as a starting point -- "thin" is still in. But don't knock yourself out trying to do the impossible. "Good enough" is going to have to be good enough.

Here's a Motorola strength. Once upon a time, a clever telecom upstart by the name of Nextel touted the "push-to-talk" feature of its phones as ideal for legions of small businessmen all over the nation. Sure, Nextel subsequently got swallowed up by the robotrons at Sprint (NYSE: S  ) , who did their best to ruin Nextel's defining product. But way back when, it was Motorola that made push-to-talk possible.

Call me crazy, but I suspect Motorola can come up with more ideas on par with push-to-talk. Ring up the geniuses at Garmin (Nasdaq: GRMN  ) , for example, and see what the GPS specialists might be able to contribute. While you're at it, check out little GPS shop called Dash Navigation. The Washington Post did a fascinating article on Dash's two-way navigation GPS system earlier this week, discussing how it could revolutionize the way drivers interact with traffic. Dash is still private, backed by an array of venture-capital folks (including famed venture capitalist Kleiner Perkins) who might not be averse to cashing in on their investment if you've got some money to spare for a buyout. 

Battery life
When I go cell-phone shopping, one of the top stats I check out is battery life. How long will the phone last on standby? How much talk time will it give me?

Whatever the actual number, it usually disappoints -- and disappoints more when I buy the phone and discover that the advertised battery life was an exercise in optimism. But if Motorola can improve battery life markedly and patent it before anybody else figures out what the company is doing, it will gain an edge that the style freaks will find tough to match. One idea might be to explore the use of fuel cells, where Millennium Cell appears to be a leader (at least, its backing by Dow Chemical (NYSE: DOW  ) suggests it's the horse to bet on).

Alternatively, if the effort to improve battery life fails to pan out, Motorola could have a sit-down with AeroVironment (Nasdaq: AVAV  ) and see if "fast-charging" batteries might give it an edge over the wall-socket crowd. A third option might be to explore the market for cheap, "disposable" cell phones. I hear the folks at Panasonic have a long-lasting Oxyride battery on the market, which could be the perfect match for a new disposable cell phone.

The great thing about hypotheticals is that the options really are endless -- unlike Motorola's planned split, which has a 2009 due date. Then again, working on deadline does tend to spur the imagination. Time for Motorola to put that incentive to use.

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  • Report this Comment On June 26, 2010, at 2:21 AM, jomueller1 wrote:

    Please! Do not promote a "disposable" cell phone. there are already to many good phones in the trash. What the industry needs and what I would buy is an upgradeable phone with a better design. With design I do not mean style but a phone that is designed around a battery that really lasts 10 hours of active use. My HTC Hero is a gas guzzler (in car terms) of the worst kind. If the screen was a little bit larger a bigger battery could used and making it just one millimeter thicker would double the battery capacity. The cost? Probably negligible.

    It would be beautiful to have a thin keyboard that can be snapped to the back or the front (or left home) and that connects via bluetooth or a retractable cable. The phone should have a way to make it stand like the screen of a notebook computer. As the smart phones are used as displays for GPS, TV, pictures, and so on there should be some way to make them comfortable to use. The phones should also have a flap covering the display so that a phone stashed into a pocket does not start it's own life.

    Another problem are the various buttons that are being depressed unintendedly whereas the ones that need to be used are hard to be operated. It seems the designers do not study ergonomics.

    Believe me, I rather have a brick than a slice of toast.

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Rich Smith

I like things that go "boom." Sonic or otherwise, that means I tend to gravitate towards defense and aerospace stocks. But to tell the truth, over the course of a dozen years writing for The Motley Fool, I have covered -- and continue to cover -- everything from retailers to consumer goods stocks, and from tech to banks to insurers as well. Follow me on Twitter or Facebook for the most important developments in defense & aerospace news, and other great stories besides.

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