Motorola eyes mobile computing with Symbol deal

SCHAUMBURG, IL and HOLTSVILLE, NY-Motorola’s intention to acquire Symbol Technologies, announced in mid-September, has piqued the interest of analysts and investors alike.

Oct 1st, 2006

SCHAUMBURG, IL and HOLTSVILLE, NY-Motorola’s intention to acquire Symbol Technologies, announced in mid-September, has piqued the interest of analysts and investors alike. The $3.9 billion cash deal, which has Motorola buying all outstanding shares of Symbol for $15/share, is said to be an indication that Motorola is ready and willing to become a major player in the mobile computing and communications business.

In addition to its well-established reputation in the laser barcode-scanning industry, Symbol develops and manufactures end-to-end enterprise mobility products featuring rugged mobile computing, advanced data capture, radio frequency identification (RFID), wireless infrastructure, and mobility management. According to analysts, Motorola-which specializes in wide-area networks-has been looking at the RFID space for years; by acquiring Symbol, the company is able to support the convergence of RFID with other wireless technologies such as WLANs and WiFi. In fact, the deal makes Motorola the biggest seller of handheld scanners with integrated RFID, according to Laurie Sullivan of Information Week.

“Think about WiFi on steroids extending to Wi-Max, with duel mode devices on top where we have great expertise in certification and designs of great cellular handsets,” said Greg Brown, president of Motorola’s Network and Enterprise business, during a call with analysts. “Then add WiFi, dual-mode WiFi, WiMax, or RFID, and that is a pretty powerful portfolio.”

According to the research firm Gartner (Stamford, CT), in 2005, Symbol shipped 11,500 readers, 3000 handhelds, and 50 million tags, although in recent years the company had been struggling with intellectual property battles with Intermec Technologies. Still, Gartner sees the RFID hardware marketing growing at a 39.2% compound annual growth rate, with the total market for RFID hardware in 2006 topping out at $372 million.

“Pairing Motorola’s Enterprise group with Symbol’s experience in “ruggedized” handheld devices, wireless LANs, data capture, RFID, and industry-specific application expertise makes sense on paper,” Gartner analysts said in a published note on the deal. “This move will provide Motorola with intellectual property, new direct-sales and distribution channels, and an installed customer base that is adjacent to its core enterprise strength in government. For Symbol, this deal offers strong financial backing, complementary intellectual property and supply chain know-how.”

However, Gartner notes that Motorola has been slow to integrate other acquisitions and that this will be a much more complicated portfolio to integrate because Motorola must balance control with innovation in executing this deal and provide Symbol’s product management with the key design decisions to grow the device and scanner business.

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