Cellular faceplates motorola phone

* Motorola finally chose a new CEO, picking Ed Zander, formerly president of Sun Microsystems, who took over from Chris Galvin in January.

The announcement was well received, given Zander's reputation as a strong manager and people motivator, and a measure of relief that the long succession search was at last over. There was also a feeling that Motorola had been right to appoint an outsider, and someone from a different technology sector, who could look at the company objectively.

Zander has been cagey so far about specific plans and priorities, but is sure about one thing--Motorola needs to "define itself". He says the brand is strong and globally recognized, but there is no longer any certainty about what it stands for. In his first interview with US journalists he said he wanted to do at Motorola what he had achieved at Sun--taking several separate operating businesses and defining the whole company around one concept (in Sun's case in 1991, internet computing).

This dues not necessarily mean that he plans to reduce the number of Motorola's businesses, as some believe he should although his first action was to confirm the planned IPO of the semiconductor unit and to make the SEC filing. Other spin-offs may follow--"some things will be spun, some will be acquired," said Zander, but was keen to stress that he wants to "build up technology assets hot reduce them". He is positive about the government and automotive operations and, while recognizing that the cellphone operation failed to spot digital as quickly as it should have, stressed that he believes the changes needed are "execution issues" not a complete turnaround.

This was disappointing for many of those listening to the conference call. One thing Motorola needs badly is to convince its customers and investors that a new CEO means a new broom and some radical action--of the kind the company has been seemingly incapable of taking for the past few years. Of course, Zander needs to be diplomatic until he has his feet firmly under the table, but many had hoped for more decisiveness from a man known for his strong opinions, outgoing nature and bulldog approach.

However, the sort approach may not last long. At Sun, Zander clashed with CEO Scott McNealy over the high spend on R&D and helped to shift the company away from working on a huge range of projects to having a unified focus. A similar strategy may be needed at Motorola, and R&D may be one of the first areas under review, with its $3.5bn budget.

A further question mark is over the future of Mike Zafirovski, Motorola's president and COO, who was one of the frontrunners for the top job. While he made the usual statements of support and the company said he would stay in his position, he admitted to being very disappointed and is widely expected to resign. He joined Motorola in 2000 after a long period at GE, and so could claim, in such a dynastic company, to be the new face that investors craved. But he remained only the board's second choice for CEO--while Zander came in as the man who turned down the offer of the CEOship of Hewlett-Packard.

The chip division, temporarily named SPS Spinco, will sell up to $2bn in stock in its IPO, according to the SEC filing. The offering, underwritten by Goldman Sachs, will happen some time next year but no specific date or target price was divulged. Motorola will continue to own a portion of SPS Spinco until 2005, when it will dissolve the financial relationship, it said. The planned spin-off is welcome as a step towards greater focus for Motorola, but one of the most compelling advantages--greater freedom for the cellphone company to shop around for its chips--will not kick in until 2006, since the company has committed to buying "most" of its handset silicon from SPS until that year. The IPO does not, of course, preclude a bid from another chipmaker to buy all or parts of SPS, with STMicro hotly tipped to make a move next year.

The world's second largest cellphone maker started the year with some interesting moves that, while small in themselves, may point to a new culture of innovation and ideas that is badly needed.

It finally shipped its cameraphones and announced the much delayed V600 worldphone, which supports voice services in 125 countries and data services in 30, via AT&T Wireless. Critics complained that these models would have been exciting if delivered on time, but were now coming out too late for the major buying period of the year.

But other announcements in Motorola's new year blitz were more forward looking. For instance, it said it would use smart antennas from start-up Motia to extend the range of its Wi-Fi and broadband wireless gear, and hinted that these could also be incorporated into forthcoming Wi-Fi/cellular handsets to increase signal strength. This would give Motorola, which is already leading the market in dual mode phone plans, a significant headstart over rivals.

On the enterprise side, Motorola will bundle VPN software for the first time, emulating similar moves from Nokia which its Finnish rival cites as critical in the business sector. It will provide Certicom's MovianVPN software in its A760 smartphone.

For consumers, its 2004 roadmap includes two gaming phones, the T725 and A835, which feature large color screens and fast downloading capabilities and target the 18-24 age group, one that falls behind other sectors of the US population in cellphone usage. The A835 also has video, camera and MP3 support.

And Motorola will also release the E380, which can be heavily personalized by the user in terms of shape and faceplates, and a range that is optimized for photomessaging.

With the exception of dual-mode, none of these plans show Motorola doing anything radical, but they do show the company finally tapping into the key trends that will drive increased sales and margins in handsets-secure enterprise communications, gaming and multimedia phones that are specialized around one consumer application.

And it is showing new willingness to experiment with leading edge technologies too. As well as the adoption of Motia antennas, this week it announced that it would be the prime partner for Apple cofounder Steve Wozniak's latest venture, WOZ (Wheels of Zeus), which is developing a system for tracking children, pets or belongings using short range wireless, GPS and smart tag technologies. And it has taken an investment in the UK's Magic4, whose multimedia instant messaging platform it has already started to use. None of these is earth shattering, but the PR activity put behind them by Motorola indicates a new faith in trying out less than conventional technical approaches in a quest for differentiation.