CTIA: The end of an era

LAS VEGAS--The Smartphone Summit kicks off CTIA today, but one company noticeably absent from the excitement is Motorola. Just one week after announcing the planned spin off of its handset business, Motorola will most likely keep a low profile the entire week of the wireless conference following its CTIA preview telebriefing last week, which was largely drowned out by the noise of the planned business separation. As the company searches for a new chief executive for its handset division, a stronger product line most likely will not make an appearance at this week’s show either.

Aside from the implications for Motorola’s struggling wireless business, the announcement of an impending separation represents much more -- Motorola is one of the last major vendors to fully separate its phone and networks business. If the spin-off occurs by 2009, no company will remain that successfully combines the these two business elements. Especially in the U.S. marketplace, a look at the history of wireless/networking companies indicates that ever major vendor has either sold off their phone businesses or seperated it from the infrastructure businesses through joint ventures:

2002:Ericsson and Sony combined their handset businesses after decling marketing shares plagued the company’s ailing mobile-phone business. Ericsson’s handset sales fell 52% in the first quarter of the year and operating losses in the division totaled $555.7 million, resulting in the ultimate merger with Sony, whose mobile division also failed to develop a successful handset business. The new company, Sony Ericsson, is focused on selling cheaper handset models at lower than average prices.

2004: Alcatel relinquished control of its own JV with Chinese vendor TCL, giving TCL full control of the handsets, marketed under the Alcatel name. Now the French vendor Alcatel Wireless will be debuting its suite of Alcatel-branded phones to be sold for the first time in the U.S. at CTIA this week. Like its previous phones launched overseas, the phones will emphasize fashion and personality rather than feature-phone functionality.

2006: Siemens sold off its handset business to BenQ, which BenQ in turn shut down in 2006. The Taiwan manufacturarer opted to shut down its production of wireless devices after recordings $760 million in losses in 2005.

2007: At last year’s Mobile World Congress show, the biggest wireless/networks shake-up was Nokia’s announcement it would separate it handset unit from the networks completely, resulting in the merger between former competitors Nokia and Siemens, forming Nokia Siemens Networks.

Other handset makers, traditionally without presence in the U.S., are even expected to surpass Motorola for a presence at CTIA this year. Companies like ZTE, Huawei and Velocity Mobile are expected to announce new handsets for the U.S. market. This is not necessarily a bad thing for Motorola, which is likely to put its energies into its WiMAX venture and its traditional focus on radio frequency technologies.

As the model of wireless/network companies officially dies out, it may be the case that these companies’ core efficiencies were spread too thin or the business model simply was not effective. Either way, for better or for worse, Motorola represents the end of an era. This week’s conference at the Las Vegas Convention Center is likely to offer a glimpse of what the next era for handset manufacturers and companies like Motorola, which still aren’t really sure where they stand, has in store for the wireless industry.

Email me at sreedy@telephonyonline.com.