Motorola: leaving its symbiotic relationship

Moving on


Motorola has opted to sell its shares in Symbian as it pursues an alternative handset path based on Linux and Java. The decision is surprising, given Symbian's improving prospects, but Motorola's faith has moved onto other platforms. Yet Samsung is also building devices for a range of operating systems and bought a stake in Symbian only this year.

Nokia and Psion have emerged as the preferred buyers for Motorola's Symbian stake, in a deal which looks set to net Motorola about $90 million. The deal
would see Nokia become Symbian's largest shareholder for the first time, increasing its stake from 19% to 32%. Psion's share will expand to 31%.

However, while the sale would appear to stand every chance of taking place, it remains possible that one or more of Symbian's other shareholders - Ericsson, Sony Ericsson, Siemens, Samsung and Matsushita (Panasonic) - may yet seek to increase their own holdings.

The sale is both unprecedented and unexpected in the life of Symbian, which appears on the verge of achieving its much anticipated breakthrough into the
mass mobile phone market. Two weeks ago, Symbian reported shipments of 2.68 million units in the first half of 2003, almost 12 times the 0.23 million
units shipped in the same period in 2002.

Certainly, Motorola's return on its Symbian investment appears relatively small, taking into account the company's rapidly improving prospects and the
fact that further investment by shareholders in Symbian would appear unnecessary or at least minimal for the foreseeable future. Motorola's original 23% stake in Symbian was valued at $46 million five years ago.

Motorola had little to say regarding its decision other than to state its continuing commitment to Symbian as a licensee. However, in a statement,
Motorola said it sees mobile Java, Java 2 Micro Edition (J2ME), as its mass-market application environment of choice. The company is also putting
considerable effort into developing smart phones around other platforms, notably the forthcoming Microsoft Smartphone-powered V700, which has yet to
be officially announced, and the MontaVista Linux-based A760.

In this light, Motorola's decision is perhaps more understandable and may simplify relationships with customers that want to specify alternatives to
Symbian. However, Samsung shares a similar agnosticism with regard to mobile operating systems and is building devices around Symbian, Microsoft and
PalmSource software - but still decided to buy a Symbian stake in March this year.

Source: Computerwire/Datamonitor

Related research: Reuters Business Insight, "The Wireless Outlook: Dealing with decline" (RBTC0061)

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