Motorola Handset Split Could Give Further Opening to Rivals

"They're all working in different directions," Faucette said. "There's lot of frustration."

Motorola will need to tap a leader that is more charismatic and isn't just a "numbers guy," Daley said, adding that the executive would need to clean house to rid itself of the current corporate culture.

Another dilemma is the lack of immediate candidates that come to mind. Still, the possibility of turning around the troubled but high-profile business could appeal to executives.

Motorola still boasts a large pool of creative engineers and designers, but needs to make better use of them.

Motorola would look into providing incentives and other retention programs to keep its talent, Brown said. He added that running the mobile devices business as a separate unit may give those employees a greater role and allow the unit to attract new talent.

Motorola's labs have processes in place to accelerate talent and ideas, and bring them to market. Daley said the company needs to put those programs "on steroids."

A Tougher Game

Even as Motorola works through its internal problems, it still faces competition on all sides.

Apple may draw the most attention with its iPhone, but Nokia and Samsung have been the key winners in taking market share away from Motorola.

Nokia gained 3 percentage points of market share last year, while Samsung took nearly 2 percentage points even as Motorola's share went to 14% from 21% last year, according to Gartner Inc.

Nokia and Samsung have steadily pumped out new handsets. And, unlike Motorola, they have been able to successfully attack each segment, from mass market phones to the high-end third-generation, or 3G, devices with the latest features.

It takes between six to 18 months to bring out a new phone and, while Motorola has sat at the longer end of the range, its rivals have been able to turn out phones at a more rapid rate.

Also nipping at Motorola's heels are Sony Ericsson, which is a joint venture between Sony and Ericsson, and LG Electronics, each of which added market share last year at Motorola's expense, according to Gartner.

The bleeding is likely to continue.

"This year is when you'll see Motorola lose significant market share," Sue said.

Spokesmen for Nokia and LG weren't immediately available for comment. Spokesmen for Sony Ericsson and Samsung said their companies don't typically comment on competitors.

With competition increasing, it will take a year - in ideal conditions - and more likely two before Motorola turns its handset business around, Daley said.

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Posted to the site on 26th March 2008

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