Middle East among key 4G markets for Motorola

The Middle East is one of the hottest markets for telecom major Motorola to deploy 4G technology, says Greg Brown, co-Chief Executive Officer of Motorola.

Motorola is also actively working with telecom operators upgrading their networks to the next generation Long-Term Evolution (LTE). Its announcement last week on LTE deployment in Saudi Arabia for Zain confirmed the company's focus moving forward.

In the emerging countries, the firm is only working with two other operators on LTE, which include KDBI in Japan and China Mobile in Shanghai.

LTE is the name of a new high-performance air interface for cellular mobile communication systems and is the last step towards the fourth generation (4G) of radio technologies designed to increase the capacity and speed of mobile telephone networks.

In the UAE, the company is active with 4G and presently talking to operators on the deployment of this technology.

Motorola has also been in the news in the past few days for other corporate reasons. The company globally split its businesses to focus on consumer and enterprise units separately. This would be led globally by co-CEOs Sanjay Jha and Greg Brown, respectively. As envisioned by company executives, the split would create two independent firms, each of which accounted for roughly half of Motorola's $22 billion (Dh81bn) in sales in 2009. The mobile handset and set-top box business will own the Motorola brand and will license it royalty free to the enterprise and networking company.

While Motorola had previously considered divesting itself of the handset division, which has struggled to find a hit to match its Razr mobile phone, the unit's performance has improved rapidly in the past year.

Now Motorola is betting the future of the handset business on producing smartphones built largely on Google's Android platform. The company became one of the largest shippers of smartphones last quarter due to the offering from the Droid phone for Verizon Wireless. According to reports, the company is expected to ship 20 smartphone models this year.

Combining the handset unit with the set-top box operations, which deliver digital video services, fits into a "seamless mobility" lifestyle envisioned by carriers. The idea is that customers would watch content interchangeably on their TVs, computers and mobile phones.

The company had also planned to sell its wireless networking division after the spinoff. However, Brown denied this fact and said it was not seeking a buyer for its set-top box and wireless networking units. Emirates Business met up with a very optimistic Brown who insisted that the split was good for the company, its investors and customers globally.


How will the split within the firm impact emerging markets and customers?

The separation is a positive step for employees, investors and customers. We have been working on this for quite some time and announced a year ago that we would consider this step and alternative structures. The announcement to separate mobile and home video devices is quite compelling. It puts together all the consumer, cable, carrier and retail together. This aggregates assets and stocks together for end-users. We think it is favourable to separate the two businesses, which are consumer and business oriented respectively. This gives a cleaner configuration for both customers and the people of the company.

In the Middle East, it will be positive, as it will allow increased focus for both businesses. The LTE contract we won with Saudi-based Zain last week is our third one after KDBI in Japan and China Mobile in Shanghai. This has helped gain customer acceptance and, post implementation, will help us build on these in a meaningful way.

Was the separation important for your customers or Motorola?

Both. We separated the company keeping in mind our customers and investors. The separation allows for greater focus, accountability, requisite assets and investments in different businesses. One is a quick-cycle consumer business while the other is a solutions oriented infrastructure business. Motorola has strengths in both and can now expand successfully.

Would this new division mean major restructuring within Motorola?

Yes. As Motorola moves the home video business to mobile devices unit, the structure change will happen immediately. There is restructuring happening as we speak, as it is the 'preparation for the separation'. Between now and next year, the segregation of IT, real estate and IP, among others, will be done between the two entities.

Does this mean adding or cutting down of offices or employees?

It will be more about moving existing employees, as we have no significant hiring plans and the reductions are behind us. In the Middle East, the effect is minimal, as business would be run as usual.

Though the division seems good for the company, the same business for which you are responsible today was up for sale last year. What are your comments on this front?

As we completed our work in the past several months, there was intense speculation about what we are doing. There have been insinuations that this plan is a default one and is a result of lack of success in other areas. This is false.

Sanjay [Sanjay Jha, Global CEO at Motorola for handsets and home video business] and I have worked on it for the past few months and this is what we both wanted. And where dividing the assets is concerned, the notion that we are doing it because of any failure to sell the assets is totally false.

The wireless networking business seems to have become an integral part of Motorola's business. What kind of investments are you driving in this area?

Motorola is making investments in the 4G spectrum, Wimax and LTE. I think this is important for the company, especially in the network infrastructure business. It also requires a lot of investment from Motorola. Therefore, if there are strategic partnership opportunities that are extended to us and help our position financially and competitively, we will consider them.

Could you specify what kind of partnerships?

Motorola made the decision on 3G four years ago and at that point we thought it was viable to partner with Huawei to develop our own 3G equipment. If there are any configurations or companies requiring a large investment then it is better for all to collaborate. Motorola would definitely consider this option.

Would Motorola consider building a telecom infrastructure and offering it to a telecom operator?

That is highly unlikely, and not Motorola's business. We provide the equipment content and will want operators to do their job. It is not our goal to become an operator.

In the 4G spectrum, which regions globally play a critical role?

In fact, Motorola has been investing particularly in research and development in 4G areas for emerging markets. The hottest markets globally for Motorola are the Middle East, Latin America and China. You will see Motorola investing in these three regions and Japan because of KDDI. The company has redirected people and investments into these markets with priority.

If 4G is a priority, will we get to hear some big announcements on deployments in the Middle East in 2010?

Yes, absolutely. Motorola will continue to work with operators globally and would want to secure contracts in this regard. The latest announcement was Zain made last week, on which work was going on for several months.

Though 4G is relevant globally, operators and trade bodies talk largely about migrating to LTE. What is your insight?

This again depends on the operator and their level of investment in existing technology. In the future, LTE will be the dominant technology deployed, taking up a global market share of at least 85 per cent. I think operators have to determine to what level they will spend and its significance. With more sophisticated smartphones coming into the market, bandwidth consumption is becoming heavier and heavier. Therefore, more operators are obligated to move to next generation technologies, given the demand coming from consumers on networks.

Do you think a migration to LTE will happen in the emerging economies?

There are some operators going from 3G to 4G and others using WiMAX. Over time, however, I believe WiMAX and LTE standards will converge. Today we talk about them separately, but this will change. At Motorola, 70 per cent of the R&D is invested in WiMAX, re-useable to LTE. I think regardless of the technology deployed over the next few years it will all come down to LTE.

In the UAE, operators are talking about 4G. Are they in discussions with you about making investments to migrate to new technologies such as LTE or 4G spectrum?

Yes, we are very much engaged with them. I can't talk about it now, but we are in discussions for 4G deployments.

The industry association, GSMA, has asked the telecom industry to come together to set a common standard for voice over LTE. What is the role of Motorola in this space?

We are actively involved in the standards formation. In the United States, Motorola has conducted trials for GSM over LTE and CDMA over LTE. Therefore, we are engaged in all of the technology and standards-based work. This describes and allows for that collaboration.

Moving forward, what would form a bigger pie for your business portfolio?

Today, in 4G, WiMAX is the biggest part of our portfolio. But over time this will be taken over by LTE. In the Middle East, LTE will come in, but after some time.

The GSMA and the industry has forecast 50 billion connected devices by 2025. Is Motorola working towards achieving this goal?

Motorola does enabling of devices and we are ensuring that operators are implementing state-of-the-art architecture. Motorola also has to make sure that there are enough of our devices to handle and absorb this network. Sanjay and I work very closely on this front. He has just rolled out our Android-based smartphone and my job is to make sure the telecom infrastructure is ready.

Do you envision both the separated divisions joining hands in the future?

They will continue to be two different companies using the Motorola brand – both with a priority around innovation and providing next generation technology.


PROFILE: Greg Brown Co-CEO, Motorola

Brown joined Motorola in 2003 and was elected to the company's board of directors in 2007.

Following the splitting of the company into enterprise and consumer business units, he is the Chief Executive Officer for Enterprise Mobility Solutions and Networks business.

Brown served as president and chief operating officer in 2007. Previously, he headed four different businesses at Motorola, including the government and public safety, networks, enterprise and automotive businesses.

He also led the $3.9 billion (Dh14.32bn) acquisition of Symbol Technologies, the second-largest transaction in Motorola's history and an important strategic move to strengthen Motorola's Enterprise Mobility business.

Brown was chairman and CEO of Micromuse, a network management software company before joining Motorola. Before that, he was president of Ameritech Custom Business Services and Ameritech New Media.

Before joining Ameritech in 1987, Brown held a variety of sales and marketing positions with AT&T for five years, resulting in 25 years of hi-tech experience.

 

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