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Hitching Motorola to one horse - even if it's Google - was a risky but necessary move, as the market-leading iPhone taught consumers to increasingly demand usability in addition to cool hardware, Motorola's traditional specialty. "Software is the star now," says Carolina Milanesi, a Gartner analyst. "The choice of Android was one Motorola couldn't postpone without risking falling further behind or never recovering...
...last year, Motorola emerged as one of the largest shippers of smart phones. That's largely due to Droid, its newest offering for Verizon Wireless. Motorola has also made headway with Cliq, its T-Mobile phone, and early in March it launched BackFlip, the first Android phone for AT&T. About 40% of wireless customers now use smart phones, according to Web research firm Crowd Science, and that portion is growing rapidly. To complement Android, Motorola developed Motoblur, one of the first user interfaces to unite social-networking tools such as Facebook, Twitter and MySpace. "We fundamentally changed our focus...
Strong brand recognition, though, will help Motorola recapture market share in Latin America, China and the U.S. Indeed, being a household name is one of the best competitive advantages Motorola retains, making its recent decision to manufacture phones branded with Google's name another questionable one. Already Motorola has had to pull Google from its phones being shipped to China after the search-engine company butted heads with the government in March. "That's O.K. for a less familiar brand like [Taiwan's] HTC," Gartner analyst Milanesi says. "But there is no value to Motorola in making phones for others...
Long term, Jha will need to consider Motorola's building its own operating software. For now, though, the first goal will be to restore stability to the beleaguered unit, especially as an independent company. One of the first steps will be to explore synergies with the TV-set-top business. "Right now, about 80% of the content people use comes to them in their home," Jha says. "But they increasingly need to carry that content on their cell phones. How can we make that easier...
...keep the strong cash flow. "We will reinvest some of that money in expanded innovation, and we can consider ways to grow the firm organically or potentially through acquisitions," Brown says. "It will also be easier to attract world-class talent to a world-class firm rather than one in transition." Perhaps two heads will prove, after all, to be better than one...