Motorola moves to diversify smartphone base as iPhone looms at Verizon

Motorola is pleased with its Verizon Wireless relationship and the Droid franchise that put the company on the smartphone map. But Motorola co-CEO Sanjay Jha also realizes that Motorola needs to diversify.

Motorola is pleased with its Verizon Wireless relationship and the Droid franchise that put the company on the smartphone map. But Motorola co-CEO Sanjay Jha also realizes that Motorola needs to diversify.

On Motorola's earnings conference call (report recap, statement), Jha's first question from analysts revolved around what happens if Verizon gets the iPhone. After all, Motorola's smartphone fortunes heavily ride on the Droid franchise.

Jha's answer:

Verizon has been a very important customer for us. I don't think we have broken out our revenue partition to Verizon in particular. But to address the substance of your question, we expect to continue a very meaningful relationship with her is on. We think the DROID franchise is economically very valuable for Verizon, and they will continue to invest and foster the DROID franchise. And as you know, we are a meaningful participant in that franchise. We will also diversify our portfolio within the United States with other operators. We are also focused on diversifying our portfolio outside of the United States. As we said, we have seen meaningful increase in our revenue in China, and we expect that we will focus in expanding our presence in China and Latin America and, to a certain extent, in Europe also. We have -- as I look into 2011 we have very -- multiple design wins with a number of operators, both in the United States and elsewhere. And as we look further beyond just the smartphone category, I see opportunities for us in the converged category as we see convergence between computing and mobility. So if you look at all of these factors, I feel that clearly in first quarter, there will be some seasonality and there will be competitive pressure, as there is in fourth quarter. But we feel comfortable with our position.

The other key diversification move for Motorola revolves around taking customers from Research in Motion. Jha was upfront about how the company plans to be an enterprise player with the Droid Pro.

We expect Droid Pro to be very competitive with other devices in the market aimed at business users. Increasingly, CIOs support giving employees a choice. If given that choice, we believe a large number of business users would seriously consider an alternative to their current device brand.

Jha continued on the enterprise plan, which revolves around consumerization.

We will invest modestly to grow and support enterprise sales also, from the point of view of making sure we have specific call support for CIOs, that we have sales calling on Fortune 500. So we will have that. But you remember, our strategy here is a very specific strategy, in the first instance. The strategy is to deliver devices which consumers like to use as a consumer device, but it has the enterprise capability which allows for CIOs to accept it into their enterprises. So our sales effort is to make sure that CIOs don't bar these devices or put it in an excepted list. But the sale is to the consumers. 80% of people in enterprises pay for their own device, and it is to that audience that we are selling primarily.

Also: Motorola's assault on RIM about to begin: 15 minutes with Droid Pro

The diversification moves make a lot of sense for Motorola. The Android competition is fierce at Verizon Wireless even if you don't consider the iPhone.

There is clearly a big increase in Android shipment at Verizon going on, and I believe that was highlighted in the earnings call just recently. We see HTC and Samsung as our primary competitor in Android, and we feel like we are very well-positioned both with our brand name.

Jha's job is to make sure Motorola stays well positioned as the mobile unit becomes its own company.

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