| BUSINESSWEEK ONLINE : JULY 17, 2000 ISSUE | ||||||||
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| INTERNATIONAL -- EUROPEAN BUSINESS
Motorola Tries to Get Back on the Cutting Edge (int'l edition) It's hunting zippy Net applications for its mobile phones The midsummer sun is glittering in Stockholm's archipelago. A block up from the water's edge, Ulf Gustafsson is overseeing the refurbishing of a centuries-old townhouse into a high-tech haven. This is Stockholm's Old Town, an area with postcard views and good coffee shops. And it's teeming with software startups, most of them focused on the mobile Internet. Gustafsson's would appear to be just one more, except for a foreign name on its shingle: Motorola. Somehow it doesn't fit. According to Sweden's division of labor, the $31 billion-in-sales American company should stay out in the grey suburb of Kista, the Nordic country's Wireless Valley. That's where the behemoths--from Motorola and Ericsson to Nokia and Microsoft--run jumbo wireless labs. The downtown is for the Net startups, with their offbeat engineers who bike and blade across the Stockholm bridges to work. Now, though, Motorola is looking to pick up some of that ponytail pizzazz and package it, in the form of software applications, into mobile phones. ''We want to be right in the middle of this scene,'' says Gustafsson, general manager of the new wireless center. BIG EDGE. Though small, Motorola's 25-person Stockholm shop is an important outpost--one that will be duplicated this year in other wireless hotspots, including London and Tokyo. As cell phones morph into mobile computers, makers must develop applications far beyond traditional telephony. Phones that handle e-commerce without a hitch and sift swiftly through e-mail will enjoy an edge in the wireless Net. And some winners will come up with applications still undreamed of. It's the hunt for this magic that keeps Motorola eager to team up with software developers. For Motorola, Europe's mobile Web offers the promise of a comeback. The American company, which dominated the wireless-phone industry just a decade ago, hedged its bets on digital and analog technologies--since analog was still popular in the U.S. This enabled the digitally focused Nordic powers to burst by. Finland's Nokia rocketed to leadership in handsets, while Sweden's Ericsson mopped up in the transmission towers that now dot the globe. But the so-called Third Generation, the high-speed wireless-data system en route to Europe and Japan, will usher in new smart phones and data transmitters. This shift provides Motorola with a chance to reassert itself. Already, Motorola is showing new vigor in Europe, the world's largest cell-phone market. The American company was among the first to come out with Web-browsing phones. It's also a leader in tri-band phones that function in both North America and Europe. With an eye to mobile e-commerce, it is creating cell phones with an extra slot for a tiny credit card. Most important, Motorola is winning back the confidence of its most important customers: the mobile-phone companies. ''Their sets were horrible,'' recalls an executive at Spain's Airtel. ''With the new models, they've turned the corner.'' Despite this progress, Motorola continues to bleed market share to Nokia, which leads with 27% of the world market, well above Motorola's 17%. More worrisome, even while launching up-market Web phones, Motorola appears to be defending its share by selling low-price phones. This is hammering the company's wireless earnings, which fell 41% in the first quarter, to $49 million. What's more, the race into smart phones has produced some pricey duds. This spring, Motorola was gearing up to unveil a palm-size organizer phone--but held it back because it was slow, bulky, and late to market. Motorola plans to add zip and launch it late this year in time for the next generation of the mobile Net. Perhaps the richest opportunity for Motorola is in the data-transmission business, where Americans generally surpass the Europeans. Data is a market that should take off in Europe, with contracts totalling $100 billion over the next four years. To win in the Third Generation, whether it's base stations or phones, Motorola must come up with zippy Internet applications. True, the company is unlikely ever again to rule the mobile industry as it once did. But hunkering down where the young Web developers work, in Stockholm's Old Town and elsewhere, should help Motorola get into the thick of things as the Net goes mobile. By Stephen Baker in Stockholm _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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