Zander: Let Motorola Entertain You

Days after disclosing disappointing sales, the handset maker unveiled devices aimed at bringing music and TV to mobile phones—and reversing the slump

by Arik Hesseldahl

When the sales news is bad, change the subject. That appears to be the tactic employed by Motorola (MOT) Chief Executive Ed Zander as he delivered a keynote address at the International Consumer Electronics Show in Las Vegas.

On the heels of dour news of slower-than-expected sales growth (see BusinessWeek.com, 1/5/07, "Wall Street Hangs Up on Motorola"), Zander used his hour-long talk to announce deals with Yahoo! (YHOO), Warner Music (WMG), RealNetworks (RNWK), and Microsoft (MSFT); to unveil a few new phones; and to demonstrate some new devices for the home. Motorola stock finished down 34 cents, or 1.8%, on Jan. 8, closing at $18.60, extending the 7.8% slide prompted by the earnings warning issued late in the previous week.

At Hand: Yahoo and Music

Zander also opted for humor, pedaling onto the stage on a bicycle and joking that it had been a long ride from Chicago to Las Vegas. The unconventional travel method was an example of "expense controls" at the company, he quipped.

But it was gadgets and new technology that Zander hoped would really wow the audience. He showed a new handset aimed at developing markets that can be charged on a bicycle. Zander also demonstrated a new mobile service, Yahoo2Go 2.0, aimed at making Yahoo services more accessible on wireless phones. Yahoo released a public test version of the service through carriers including Sprint Nextel (S); Verizon Wireless, a joint venture of Verizon (VZ) and Vodafone (VOD); Cingular Wireless, the mobile unit of AT&T (T); and T-Mobile USA, a unit of Deutsche Telekom (DT). Yahoo2Go works on handsets not only from Motorola but also Nokia (NOK), Research In Motion (RIMM), and Samsung.

Motorola also launched two handsets based on a new design for music downloads. The company bills its Motomusic Experience as a series of phones optimized for music and media. One phone, the RIZR Z6, will be compatible with Microsoft Windows Media Player subscription stores. The phone looks vaguely like Motorola's popular RAZR handset, but instead of folding open, its upper portion slides up to reveal a keypad.

TV Going Mobile, Too

The music-enabled phones can't help but be intended to take some of the attention away from Apple Computer (AAPL), which is expected to unveil its own music-ready phone device on Jan. 9 (see BusinessWeek.com, 1/8/07, "Apple's Wireless Effect"). In 2005, Motorola had teamed up with Apple on the original ROKR phone, which was the only non-Apple device to play song files from Apple's iTunes Store, but the relationship between the companies appears to have soured (see BusinessWeek.com, 9/8/05, "Apple's Phone Isn't Ringing Any Chimes").

Additionally, Motorola announced that it would collaborate with Warner Music on the creation of music and entertainment products for wireless phones, and Zander demonstrated a set of headphones using Bluetooth technology, which enables wireless connections to other electronic devices.

On the set-top box front, cable concern Comcast (CMCSA) said it would extend its relationship with Motorola and purchase $1 billion worth of set-top boxes. Some of those will support a new feature, called "follow me" TV, demonstrated by Zander. The technology will let consumers move TV shows they're watching around the house, but also watch them on compatible mobile devices.

Hesseldahl is a reporter for BusinessWeek.com.