Motorola Enhancing Music Offering - Analyst Blog

Motorola Mobility Holdings Inc, a wholly owned subsidiary of Motorola Inc. (MOT) yesterday announced that it has acquired privately held Zecter Inc., a provider of synchronization and streaming technologies for on-demand mobile digital content. Zecter's ZumoCast and ZumoDrive software allows users to transfer content between mobile handsets and netbooks and PCs. Motorola will integrate this software within its smartphones to enable Motorola smartphone holders to stream music from the Internet and later move these to other digital devices.

Ever since Motorola adopted the Android operating system of Google Inc. (GOOG), the company started showing signs of a turnaround for its struggling Mobile Devices segment. However, the smartphone market is becoming intensely competitive day by day. Other Android-based smartphone developers such as Samsung and HTC have become major threats to Motorola for their low-cost structure. We believe the acquisition is an attempt by Motorola at product differentiation.

The other reason may be the recent announcement of Verizon Wireless (VZ) that the company will start offering 4G LTE-enabled smartphones developed by Motorola from mid-2011. Verizon has started deploying the LTE network in the U.S. early this month. However, the company will be able to deploy LTE in a substantial part of the U.S. by mid-2011. Currently subscribers of Verizon's LTE network can get this super-fast data transmission facility only on their laptops/netbooks.

We believe Motorola is trying to develop a mobile digital content ecosystem for Verizon's LTE network based-on very powerful Android software ecosystem. Already HTC has introduced the first 4G-enabled handset for Sprint Nextel Corp.'s (S) WiMAX network. Motorola will integrate Zecter's wireless syncing, desktop integration, video transcoding and thin-file retrieval technologies within its smartphones that will enhance MOTOBLUR service offerings.

Earlier this month, Motorola declared that its much awaited split into two separate entities will happen on January 4, 2011 before the opening bell. The new companies will be called  - (1) Motorola Mobility Holdings Inc, which will comprise Mobile Devices and Home Businesses, and (2) Motorola Solutions, which will comprise Enterprise Mobility Solutions and Networks Businesses. In a nutshell, Motorola Mobility will be more retail consumer centric whereas, Motorola Solutions will be more enterprise centric.

 
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