Motorola positive about mobile phone unit

Motorola expects the performance of its troubled mobile phone business to start improving in the second quarter, Greg Brown, joint chief executive of the US handset maker, told the Financial Times .

He said the division should report a reduced operating loss in the second quarter of this year compared with the first three months of 2009. Last year it made a $24.2 billion loss and its shares have fallen 68% in the last year. There have been calls to shut it down altogether.

In a frank interview  with the FT, Brown said, "I think the majority of the challenges Motorola faces are our own doing." He cited the company's ill-founded, expensive dash to grab market share in developing markets in 2006, the failure to repeat the popularity of the Razr with newer models, and in particular, not seeing the rising market for smartphones that exploited 3G for internet access.

He was quoted saying that Motorola "didn't see the trends coming in smartphone and 3G with the kind of foresight and customer attention that it should have".

He also said Motorola had failed to anticipate the growing importance of mobile software rather than handset design and, instead of striving for simplicity, its perseverance in using several operating systems and chipset suppliers.

Motorola was the world's largest mobile maker in the 1990s until Nokia overtook it in 1998.

This year, Motorola is planning to reduce its operating expenses by $1.5 billion, with the bulk of savings coming from the mobile unit. In part this will be delivered through the handset strategy it unveiled last month - mid to high range smartphones based on Google's Android operating system, to be shipped in the US, Latin America and China.

Motorola is concentrating on manufacturing mid to higher-priced mobiles and focusing its sales efforts on the US, Latin America and China. This means the company could lose its position as one of the world's top-five handset makers in 2009.

This level of rationalisation, the decision to not to focus on Europe as a primary market, plus the fact that it has a tiny base in smartphones on which to build on will probably mean Motorola will exit the top five handset makers this year.

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