Motorola is to split into two companies, with one focusing on its struggling mobile phone business and the other on its more profitable mobile enterprise and broadband operations.
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The separation of the two businesses by 2009 follows last year's decision to axe 7,500 jobs to save £210m. The latest decision follows a management review at the beginning of this year, said Greg Brown, Motorola's president and chief executive officer.
Motorola's mobile devices business designs mobile handsets and licenses a portfolio of intellectual property globally.
Its enterprise businesses includes enterprise mobility, government and public safety, home and networks. These businesses manufacture wireless broadband networks for enterprises customers worldwide. Recent customers include BAA.
But Gartner said Motorola's standalone enterprise division faced several challenges. Prices for device and network hardware are falling because of low-cost Asian suppliers entering the market and the increased use of global sourcing in manufacturing.
"Splitting the company like this is the right thing to do," said Martin Garner, mobile director at Ovum. "We think it should be done as quickly as possible - within six months, if that is feasible - because the longer the current conditions go on, the harder it will be for Motorola's new handset business when it is formed."