Motorola's Demise & Application/Multimedia Processors

[Arun]

Motorola is in trouble. That's not news, and it should be fairly obvious to anyone following the industry in recent times. This has let me to ponder a very simple fact: integration makes the most sense when the market is stable and incremental cost benefits give you noticeable advantages. However, the picture may not be so pretty when that's not the case and the innovation cycles of the different parts are significantly different.

So what I'm wondering here is pretty simple: there are many companies which are betting on integration (Qualcomm, NXP, arguably Broadcom, etc.), several who are hedging their bets (AMD, TI, arguably Broadcom, etc.) and a few which aren't and seem abnormally confident (CSR/Icera/NVIDIA) and perhaps overly so. All of those three are slated to make major announcements at what-was-known-as-3GSM, afaik and fwiw.

So what I'm wondering is - are the current events in the industry and the rapidly changing positions of certain manufacturers going to postpone integration, or even make the industry start thinking it really doesn't make sense for certain segments? Or are the analysts right and discrete application and multimedia processors are already on their way to extinction?

CSR's arguement is that they are best-of-breed and combining a bunch of non-best-of-breed technologies together is just not going to work and it's not going to get traction at OEMs or carriers. I'm skeptical, but of course if the quality of a discrete component is higher, that helps a lot - but how much higher should it be to matter?

 

[manux]

How about lack of integration/efficiency in cheaper mass devices and hence lower profits per device(even loss per device) That's probably where the real money is and where Motorola has lost a lot in attempt to gain market share.

I personally and generally see hypotethical non integrated solutions as gap stop or product category fillers for a manufacturer while attempting to make a single chip/more integrated cheaper solution available in mass market later on. Every penny counts if one is selling tens of millions of devices.

My view what is sensible depends of course if I'm thinking about mass devices selling tens(or even hundreds if counting all variants) of millions or the higher end devices selling in hundreds of thousands.

edit. So in nutshell, I see mass market devices as something that should bring the money in and the higher end devices as something that necessarily don't make that much revenue(and profit) but are needed because todays highend is tomorrows mass market. Consumers in large(the hundreds of millions people who buy new phone every year) don't care about the high end. If I remember correctly sales estimates were around 900 million phones to be sold during 2008.

 

[Arun]

I don't think I fundamentally disagree, but I suspect we put the lines for 'higher end devices' at different price points. My understanding of Motorola's margins is those are the primary problem mostly in Asia and especially China/India. In those markets, you *do* need single-chip 2G/2.5G solutions or you're effectively toast. But not every market has ASPs that low either.

The way I've seen some graphs/analysts look at the 3G/4G market is this: they divide the market in 'basic' very cost-conscious smartphones that are 2/3rd of the worldwide market. Then you have 1/3rd that of the market that diffentiates more on features, user interface, etc. - and in a few years, that latter market is likely to be 150-250M units, and the open question is whether the vast majority of that (currently a fair bit smaller) market is going to continue to focus less on integration.

Motorola's problem right now, IMO, is that they're not cost-conscious in the cost-conscious market and they're nto feature-conscious in the feature market. That might be a bit of an oversimplification, but it's certainly my personal impression from looking at their line-up...

 

[Carl B]

I think honestly Motorola's present situation has to do with the lack of a stylistic successor to the Razr, more than any reason stemming from obsolescent chip/packaging design. First with the StarTac, next with the Razr, it just seems to be Motorola handset division's fate to have its success tied to singular iconic offerings.

Just you wait... ten years from now they'll be back with another smash hit!

 

[_xxx_]

Hasn't Motorola sold their semiconductor division (Freescale)?

On Friday, September 15, 2006 Freescale agreed to accept a buyout for the sum of $17.6 billion ($40 per share) by a consortium led by Blackstone Group LP. Share prices of $13 at the July 2004 IPO had risen to $39.35 in afterhours trading that Friday when the news, rumored that week, broke. A special shareholders meeting on November 13, 2006 voted to accept the buyout offer. The purchase, which closed on December 1, 2006, is reportedly the largest private buyout of a technology company and one of the ten largest buyouts of all time.

As for the phones, I used to use a Razr, but all that came after just plain sucks. And don't even get me started about their "software" (feels more like a half-baked buggy student project than a commercial SW anyway). Everyone expected even smaller and thinner phones and they came back with bricks. Duh.

 

[Arun]

I think honestly Motorola's present situation has to do with the lack of a stylistic successor to the Razr, more than any reason stemming from obsolescent chip/packaging design. First with the StarTac, next with the Razr, it just seems to be Motorola handset division's fate to have its success tied to singular iconic offerings.

That's probably right. I guess integration both helps and hurts there: it allows you to make smaller designs due to the smaller number of chips, but it might also slowdown the introduction of new designs slightly. So overall it's probably not the most important point.

Discrete components helps struggling companies from the POV that it alllows them to change their roadmap more quickly. Certainly not negligible, but also hard to properly estimate.