Motorola Inc.’s announcement last week that it plans to acquire a Danish research-and-development facility and team of product-development engineers appeared routine at first blush: global juggernaut rolls up modest facility and team to bolster its continuing momentum toward worldwide market domination. Whatever.
But a conversation with a Motorola executive suggests that the Schaumburg, Ill.-based handset giant has some specific ideas for new products-“experiences”-that the acquisition, in part, is intended to fulfill. And that suggests that the ante has been raised for traditional handset makers as their customers upgrade their networks and players such as Microsoft Corp., Apple Computer Inc. and others join the fray over advanced services.
The Motorola deal calls for the handset vendor to acquire BenQ Mobile Corp.’s state-of-the-art R&D center and the services of 250 engineers in Aalborg, Denmark, located in the “Danish Silicon Valley.” For BenQ, the deal allows it to streamline its own R&D efforts and lower overhead in its effort to produce high-end handsets and get back into the black after a series of disappointing quarterly financial losses, despite strong sales.
Roger Entner, vice president for wireless telecom at Ovum, said that with the BenQ R&D purchase, Motorola is “putting its money where its mouth is”; that is, the handset behemoth must take active steps to ensure it retains its current status as a global leader in innovation.
What use might Motorola make of the new acquisition, in Entner’s view?
“Motorola is the clear leader in design right now and leadership in design has led to Motorola’s resurgence,” he said. “I’d say right now that Nokia [Corp.] is challenged by design. One of the weaknesses of the Motorola phones, however, has been the user interface. There they could certainly improve.”
In the first hint at what the Aalborg facility and team could do for Motorola, Ron Garriques, president of Motorola Mobile Devices division, last week mentioned “breakthrough products and experiences that integrate the technologies of both Motorola and our strategic partners.”
(Somehow, “experience” has now replaced time-worn phrases such as “killer apps” and “compelling content.” The Jimi Hendrix Experience was indeed ahead of its time.)
Scott Durchslag, corporate vice president and general manager in the mobile devices division, last week offered a more specific explanation of Motorola’s plans.
“To put this acquisition in the context of the broader strategy for mobile devices,” Durchslag said, “our strategy really rests on, first, ensuring that we have absolutely compelling, gorgeous designs in each of the major form factors and, second, ensuring that we have got some killer experiences sitting on top of those designs. In particular, there are a set of those experiences that we’re developing with some key partners that we want to be sure we can bring to market in some fantastic products. So that rich-experience base of products will be headquartered at that site in Denmark.”
What types of “experiences”?
“You can imagine some of the obvious ones like music and video,” Durchslag said. “But it goes beyond that. It goes into what we call the `instant Internet,’ social networking, active lifestyles. So what we’re looking to do is not have competency centers in the traditionally defined functions, but to be able to integrate across them with bundles of experiences that touch on the needs or `points of pain’ of consumers as we try to pull them up the adoption curve to do things beyond voice on the devices.”
“We’re always looking to make opportunistic engineering acquisitions like this,” Durchslag continued, “where it makes sense in terms of what we’re trying to do with the overall portfolio and where we’d like to have engineers geographically. This one made an awful lot of sense because that area of Denmark is a very productive one in terms of the quality of the engineers and the availability of some great talent. We were very impressed with the capabilities of the engineering team there. And what we intend to do with that facility is product development in advanced media and integration of multiple capabilities. For some of the advanced products that we intend to develop, we needed engineering teams with the cross-functional skills you need to execute that. That’s why [the Aalborg R&D center] with its antenna chamber and the whole ecosystem around it made a lot of sense.”
Will the Danish team work specifically on products destined for the European market, where Motorola has some catching up to do?
“They’ll be working on global products, so it’s not like they’re going to be working only on products for sale in Europe,” Durchslag said. “That said, obviously some of the products that will be developed are going to be made available to our channels in Europe. So, yes, I’d say it’s logical to say that some of those [Denmark-based] skills would work very well in that marketplace, sure.”
Asked point blank whether the Aalborg team will be working on a specific, upcoming product, Durchslag carefully demurred. “We’re not disclosing that,” he said. “I can’t answer that without going into details about products, and those products are far enough into the future. We usually don’t comment on products until it’s a lot closer to launch time.”
Is that a new Motorola practice, avoiding announcements much in advance of launch?
“A lot of people in the industry make announcements way early,” Durchslag pointed out. “Instead of hyping things up, we want to be focused on creating great products and experiences. When they’re close to coming out, that’s when we want attention focused on them-when they’re most real. It’s nothing more than that.”
What about the China TechFaith Wireless Communication Technology Ltd.’s knock-off of Motorola’s upcoming Q, which received some press after its appearance at CTIA 2006 last month?
“If imitation is the sincerest form of flattery, we’re very flattered these days,” Durchslag said. “And there’s no reason for us to make that any easier than it needs to be.”
