Motorola Falls to Pieces

Posted on | March 27, 2008 |

by Mike Megalli

Big news day for Motorola with the announcement by CEO Greg Brown that they would be splitting off the company’s mobile handset business. As we have covered before, this news in the latest in a series of shake-ups, mix-ups and screw-ups that have dropped the tech giant to a shaky 3rd in the market for cellular handsets.

Brand issues often arise in M&A situations where the merged entity has to weigh the market equities and decide whether to keep one of the pre-existing brands or create a new one. This process is often fraught with emotion as loyalists on both sides make claims as to their brand’s predominance.

Motorola’s breakup brings the company face-to-face with a corollary challenge: which of the two emerging companies gets the Motorola brand and how is the other company branded? In the early part of the decade, Accenture and BearingPoint brands were born out of similar splits. Freescale Semiconductor was created in 2004 after the spin off of Motorola’s semiconductor business.

It seems fairly clear that the handset business needs the brand more than does the set-top box/modems side of the house. At the same time, neither side can afford to lose any advantages.

As it splits, Motorola will need to think creatively about how it maximizes the brand assets it has. One possibility would be to use the “Moto” brand — a cornerstone of the handset advertising campaign and a recognizable brand in its own right — as the new handset brand. This raises questions about global applicability of the Moto brand, and yet desperate times call for desperate measures.

Mike Megalli is Partner at Group 1066 a marketing innovation firm.

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