On 19 September 2006, Motorola announced its intention to acquire Symbol Technologies for $3.9 billion. Motorola expects to close the deal by early 2007, and will retain Symbol's Holtsville, New York, headquarters as headquarters for Motorola Enterprise Mobility Solutions. The new, wholly owned subsidiary will report into Motorola's Networks and Enterprise segment, increasing its annual revenue run rate as a segment from $12 billion to approximately $14 billion.

Pairing Motorola's Enterprise group with Symbol's experience in "ruggedized" handheld devices, wireless LANs (WLANs), data capture, radio frequency identification (RFID) and industry-specific application expertise makes sense on paper. 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. Other interesting benefits from such an acquisition include:

• It offers the enterprise group the potential to have a group independent of the Mobile Device segment.
• It would make it more difficult for Motorola's chief competitors to predict its moves.
• Motorola could improve the Symbol business margins by bringing manufacturing operations under its wings.

However, Motorola has been slow to integrate other acquisitions (such as its 2004 mesh networking acquisition). This will be a much more complicated portfolio to integrate and Motorola must balance control with innovation in executing this deal, providing Symbol's product management with the key design decisions to grow the device and scanner business.

Gartner believes that Motorola will retain Symbol's WLAN infrastructure business so that it can bundle this offering for vertical industries and complement its WiMAX and voice offerings. In particular, the Air PBX concept (which Motorola is pursuing with Microsoft, utilizing Office Communicator) gets a boost by adding WLAN capabilities, allowing the possibility to tightly integrate WiMAX-WLAN-cellular roaming. Such integration would make the all-cellular-phone office a more likely possibility. To remain viable in the WLAN market, Motorola must build its WLAN capability by positioning it as an integrated offering in contrast with other WLAN infrastructure vendors such as Cisco, and by exploring partnerships/acquisitions with the likes of HP's Procurve Networking and AirDefense.

Symbol customers and prospects:

• If your enterprise is considering ruggedized handheld purchases, don't expect to benefit from lower prices or enhanced radio functionality in the short term, as supply chain efficiencies and product synergies (such as improvements in radio frequency or chipset designs from Motorola) will take at least two years.
• Consider the possibility of changes in Symbol’s WLAN product road map regarding voice integration

Additional research contribution and review: Rachna Ahlawat

• "MarketScope for the 'Ruggedized'-Handheld-Computer Market" — Motorola must prove that it can transition from custom hardware vendor to a true competitor in the ruggedized-handheld market. By Todd Kort, William Clark and Ken Dulaney
• "Vendor Rating Update: Motorola" — Motorola keeps its "positive" rating based on strong growth in mobile handset market share and improved operations. By William Clark and others

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