Motorola: The End of an Error

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via its partnership with Verizon Wireless. But it's a weak player in the technology used by AT&T (T) and Deutsche Telekom's (DT) T-Mobile. With Motorola's gear, LG could close in on Samsung and Nokia, says an analyst who has covered the industry for years. Nor is it unthinkable that Samsung would snap up Motorola's assets. "That would give them a chance to close in on Nokia," the analyst says of either potential acquirer.

There are also several smaller Asian hardware players that are looking to jump into the wireless world. Huawei Technologies and even Lenovo Group, which recently bought IBM's (IBM) PC business, are possible suitors, says Oppenheimer & Co. analyst Ittai Kidron. Private equity players are also logical candidates, analysts say.

The challenge is that it will take a great deal of investment to get the business back on track. And, even then, competing successfully with the likes of Nokia, Samsung, and others will be tough. "It's not going to be easy," says Kidron. "There's a lot of risk in taking it on."

The End of Another Chapter

And what of the business left at Motorola? Without cell phones, 51% of the one-time phone giant's business would be left with units that are profitable, though considerably less sexy. One sells TV set-top boxes and wireless network equipment, and the other sells wireless equipment to enterprise customers and government agencies. Analysts have valued Motorola, without the mobile devices division, at about $30 billion.

In the annals of technology, the dissolution of Motorola's cell-phone business would mark the end of an era. This is the company that invented the market in 1983, and then built a reputation for iconic, if only occasional, design blockbusters. It wowed the market with its StarTac in 1996, riding high as the world's No. 1 mobile-phone producer. After being usurped by Nokia, it generated talk that it might once again regain the top spot when it introduced the super-thin Razr earlier this decade.

But Motorola also has a history of creating and excelling in markets only to exit them amid stiff competition. It was a standout in the car radio business and later in the TV business during the 1950s and 1960s. It eventually shuttered both. In TV production, for example, it ceded to the Japanese, who now dominate the market. "It certainly would be a sad thing to see handsets go to zero," McKechnie says. "But that's what companies do."

Crockett is deputy manager of BusinessWeek's Chicago bureau .