Motorola To Quit Mobile Phone Market?

Speculation is mounting that US phone Ccompany Motorola may quit the mobile phone market all together or be taken over by a Chinese manufacturer. The shock proposal comes only weeks after Ed Zander quit the company as CEO. Motorola who produced the RAZR, one of the most ubiquitous mobile phones of the decade is struggling to compete up against the likes of Nokia, Samsung and the Research In Motion Blackberry.

According to Apple Insider Nomura investment analyst, Richard Windsor of the London-based firm explains that an investigation suggests Motorola would drop the segment entirely and instead focus on its enterprise and government sectors.

Talks of a Chinese takeover, however, are an “old chestnut” that isn’t likely to come true unless a buying firm knows how to mend Motorola’s business, the analyst says. Instead, the American company is most likely to become profitable only after enduring a “very difficult” 2008.

Motorola is already said to be suffering, and in the fourth calendar quarter of 2007 reported a 38 percent drop in its mobile device sales compared to the same period a year ago — a stark contrast to an industry widely agreed to be growing over time. The departure of Ed Zander from Motorola’s chief executive spot in mid-quarter is understood to have been partly driven by the increasingly poor results.

Most of the reasons behind the plummeting welfare of the Motorola division are understood to stem from its emphasis on individual devices. By ignoring software and the platform as a whole, Motorola has essentially given Nokia a two-year lead, Windsor says.

The researcher sees this as a trend for other handset makers as well. Other leading cellphone designers such as Samsung and Sony-Ericsson are also expected to prey on Motorola’s vulnerability. Though still small, Apple has also been cited in industry surveys as stealing marketshare and perceived influence from Motorola with the iPhone.

For Apple, a Motorola departure would only serve to vindicate its decision to create its own handset. The failure of the ROKR E1 music phone in both its awkward hardware and feature-limited iTunes software were reportedly frustrating enough to Apple head Steve Jobs that he launched an end-run around Motorola, discussing an Apple-made phone with Cingular (now AT&T) even before the ROKR reached store shelves.

According to an investment analyst with the firm Nomura who was quoted by AppleInsider.com, Motorola may get out of mobile hardware and instead focus on its “enterprise and government sectors.” The analyst, Richard Windsor, is said to have conducted an investigation of the possibility, and considers it more likely than another rumored scenario, a Chinese takeover of the company.

Motorola has struggled the last few years as Nokia and then Apple passed it in phone functionality; chief executive Ed Zander left the company late last year.