Tuesday, March 25, 2008

Cisco: Hello, Moto?

I'm at the ZTE Global Analyst Conference in Shenzhen, China, but I'm following Carl Icahn's latest moves on/against Motorola. In the past, there were many rumors that Motorola would spin or sell off its sputtering mobile phone business in order to raise cash. Those rumors were incorrect (at least at the time,) but Icahn's renewed activity has led me to speculate (and that's all I'm doing) about who would be a good buyer for Moto's handset business, if the company decided (or was forced) to sell.

Most of Motorola's competitors either ruled themselves out the last time or, like Nokia, would likely be ruled out due to antitrust considerations. But there's one company that I think should be ruled in: Cisco. Yes, Cisco and Motorola are fierce competitors in many aspects of the cable and IPTV businesses, but Cisco only has an IP phone business right now.

Adding Motorola's mobile handset business would dramatically increase Cisco's telco business, but it would accomplish two more important things:

  1. It would make Cisco one of the largest players in a business that's far more important than PCs and set-top boxes combined to getting IP-based content and services into the hands of consumers. Last year, according to Strategy Analytics, 1.12 billion mobile handsets were sold, vs. 267.7 million PCs shipped worldwide, according to IDC.

  2. It would turn Cisco into a consumer brand, an objective long cherished by Cisco management. Last year, Motorola shipped 159 million mobile handsets. Imagine the consumer impact if those handsets carried the Cisco logo instead of Motorola's.
Yes, Motorola has slipped to Number 3 worldwide in the mobile handset business behind Samsung, but by a tiny amount. Strong product management and creative recruitment of development teams from competitors could turn the situation around for Cisco, not to mention the fact that team morale at Motorola would most likely improve immediately.

"Hello, Cisco" has a nice sound to it. Let's see if it sounds good to Motorola as well.
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