updated 06:30 pm EST, Thu January 14, 2010
Droid's success leads Moto to rework strategy
Motorola is considering backtracking on its plans to spin off its mobile business, a leak from near the company suggests (subscription required). Runaway sales of phones like the Droid, along with bids for the mobile division that have run roughly $1 billion lower than the $4 billion to $5 billion Motorola wants, have led the communication firm to think about keeping the mobile division inside.
Two companies, cable equipment maker Arris and Chinese telecom producer Huawei, are reported by the Wall Street Journal as having placed some of the first bids and qualified for a second round, though Arris is small enough that it would need private equity to make the purchase. However, a mid-February round of extra bidding might not take place on time or at all now that Motorola is reexamining its plans, according to the tips.
The Illinois-based company since 2008 has planned to break off its mobile unit but originally made the decision before taking on current CEO Sanjay Jha and undergoing a major rework of its mobile strategy. At the time, all its smartphone were running the poorly-received Windows Mobile OS and most of its fortunes were still dependent on media phones like the RAZR and ROKR lines, neither of which has either had a high profit margin or shipment volume in recent years.
In 2009, however, Jha said the company would drop Windows Mobile entirely for its smartphones from then through 2010 and has instead been focused on phones like the Droid, Backflip and Cliq along with rumored future devices like a keyboard-less Droid and the Opus One. Thanks to heavy promotion from Verizon, the Droid may have sold over 800,000 Droids in a month and will have generated much higher profit margins as a result.