Motorola’s Moloney: The Wireless Blend
Unit President Outlines Reasons For Recent Reorg
By Todd Spangler -- Multichannel News, 9/9/2007 8:00:00 PM
Most North American cable operators haven’t fully fleshed out their wireless strategies. But Motorola says it will be ready when they do.
Earlier this year, Motorola merged the Connected Home Solutions group — which had focused on cable video, voice and data products — with its mobile-communications infrastructure group.
The reorganization, effective as of the beginning of April, created the Home and Networks Mobility business unit, which is focused on delivering broadband communications over wired or wireless network infrastructure.
Why the change? Group president Dan Moloney, who previously ran Connected Home Solutions and has worked in cable for more than 20 years, used a hockey metaphor to explain: “You have to look at where the puck is moving, as opposed to where it is today.”
In Moloney’s analysis, the puck is moving toward three main areas: video everywhere; video anytime (“from primetime to my time”); and broadband on the go.
“We need to get out in front of our customer base for how we’re running the business,” Moloney said. “It’s not a wireless world and a wired world. It’s a blended world. As a consumer, you’re interested in getting what you want, where and when you want it, without worrying about being tethered to a particular network.”
The repositioning means Moloney is overseeing a much larger group. He declined to provide a specific head count, but in terms of revenue, Home and Networks Mobility is more than double the size of his previous unit. As a combined entity, the new segment would have generated $9.2 billion in revenue in 2006, whereas Connected Home Solutions was a $3.3 billion business last year.
Besides melding its service-provider businesses into one group, Motorola also may have been looking to balance out fluctuations in revenue.
The Home and Networks Mobility group’s revenue increased 10% in the first half of 2007 compared with a year ago, the company noted in its 10-Q filing for the quarter ended June 30. The growth was driven by the video side — chiefly high-definition set-top boxes and Internet Protocol TV devices — which Motorola said was partially offset by lower demand for cellular-phone infrastructure in North America and “continuing competitive pricing pressure on GSM [Global System for Mobile] infrastructure equipment.”
The restructuring comes as Motorola has been smacked hard by falling sales in its core mobile-handset business. Separately, the company has announced plans to eliminate about 7,500 jobs, or 11% of its workforce, in 2006.
| Merging Service-Provider Plays | ||
|---|---|---|
| Motorola this year reorganized its three business units: | ||
| Unit | Customer Segment | Description |
| SOURCE: Company reports |
||
| Mobile Devices | Consumers | The company’s core wireless-handset business |
| Home and Networks Mobility | Cable, telephone and wireless service providers | Digital-video systems; interactive set-tops; voice and data modems; broadband access systems; and wireless access systems including cellular infrastructure systems |
| Enterprise Mobility Solutions | Government agencies and businesses | Analog and digital two-way radio; voice and data communications products for private networks |
CONVERGENT TALKS
Now that Moloney is in charge of the wireless service-provider portfolio, he said he’s had to bone up on GSM and other mobile technologies. But he claimed it’s not completely foreign terrain.
“The good news is that over the past several years, I’ve found myself in conversations with customers where the discussion flows between wired and wireless,” he said.
In the United States, cable’s most visible wireless foray has been Pivot, the mobile-phone service provided by Sprint Nextel and resold by four cable operators — Time Warner Cable, Comcast, Cox Communications and Advance/Newhouse Communications.
But there’s likely more yet to come. The same four operators have formed SpectrumCo, a joint venture that acquired Advanced Wireless Services (AWS) spectrum from the government last year. (Sprint relinquished its stake in SpectrumCo earlier this year.)
Even before the Motorola restructuring, Moloney said he has pulled members of the company’s wireless-infrastructure team into SpectrumCo meetings over the past year as the operators have “been exploring what to do with the spectrum.”
Still, some analysts doubt there’s much synergy possible between the wireless and wired product groups today.
“It’s a changing industry, both on the wireline and wireless side,” Pali Research analyst Walt Piecyk said. “But will it make a difference if those groups are together or separate?”
In response, Moloney said the benefits of uniting Motorola’s service-provider technologies are clearer to those outside the U.S. In many countries, he said, the incumbent wireless provider also offers multichannel video services, citing as examples France Telecom, Spain’s Telefónica, Canada’s Rogers Communications and Singapore’s StarHub.
To these service providers, “it’s a very compelling proposition to link wireless and wired networks,” Moloney said, adding, “I certainly don’t want to downplay the importance of the U.S. market, but there are seven times as many television households in the rest of the world.”
CONNECTING THE DOTS
So where — and how — will the wireless and cable sides intermingle? Moloney provided some examples.
One area where the two worlds clearly collide is mobile video. Moloney said operators are pushing to offer mobile video, over a variety of technologies. At this point, he’s carved off a small group to focus on mobile video, comprised of cellular-networking engineers and video experts from the former Connected Home business.
Motorola, which is a key provider of WiMax broadband-mobile equipment to Sprint and Clearwire, is also looking “at how to develop an integrated gateway for the home” to provide voice, video and data services via a single device that could talk to wireless and wireline networks.
“We’ve started a lot of linkage pieces,” he said. “We can now show [customers] a tighter road map and strategy.”
Moloney noted that the reorganization does not portend any deviations in Motorola’s products geared toward cable. “First and foremost, it doesn’t change anything we’re doing with [cable operators] in terms of driving video strategies, data and DOCSIS [Data Over Cable Service Interface Specification] strategies,” he said. “What has changed is that you have cable operators looking at the wireless play.”
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