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Motorola buys Symbol, users get greater flexibility

After a few days of swirling rumors, Motorola today acquired Symbol Technologies, a move that will help users gain more flexibility in mobile device choice and support.

Motorola Inc. today bought industrial handheld device maker Symbol Technologies in a definitive merger agreement under which Motorola has agreed to acquire all of the outstanding shares of Symbol for cash.

According to an announcement from both companies, the deal has a total value of just under $4 billion. Mobile experts say that the deal will give users the ability to make Motorola a one-stop shop for their mobility strategies. It will broaden device choice and also allow users to buy smartphones, industrial devices such as barcode readers, and Wi-Fi and RFID gear all from the same vendor.

Symbol designs, develops and manufactures mobile products such as rugged industrial devices, RFID tools, wireless infrastructure gear, and mobility management solutions.

For enterprise users of both Symbol's and Motorola's technologies, the acquisition may not bring about too many changes in the short term, but the long-term impact seems likely to be beneficial.

"So your average person using a Symbol barcode scanner won't see any major changes other than perhaps the logo on their device," said Daniel Taylor, managing director of the Mobile Enterprise Alliance. "Longer term, it will mean that users will have greater flexibility in device choice and support within the enterprise, because one platform will support a whole range of Motorola devices."

For IT shops, the acquisition will mean expanded capabilities from Motorola, Taylor said. To date, there has been an imaginary wall between the smartphone side of the business and the made-for-the-enterprise products that Symbol has defined.

"Motorola will be able to offer IT organizations a single management platform for everything from ruggedized handhelds to the latest smartphones," Taylor said. "Also, Symbol brings an extensive three-tier distribution system to the table, and IT departments will be able to buy solutions through distributors, systems integrators and value-added resellers – the types of companies from [which] they buy other IT solutions already."

Taylor said this will allow IT departments to better accommodate the latest mobile devices, such as the Motorola Q, and fit them into their best practices for mobility management.

"This is significant because Motorola will be the first company to have mobile solutions for everything from the shop floor to the traveling executive, providing infrastructure and support at all levels in between," he said.

The acquisition comes after several sub-par years for Symbol. The company's stock slid and investors went with it.

"This is a great opportunity for Motorola to acquire relatively cheaply the market leader in the industrial handheld computer market, as Symbol's stock has been depressed by several financial incidents and poor management over the last five years," Gartner Inc. analyst Todd Kort said. "A lot of investors have lost faith in Symbol, and the stock has been stuck in the $10 to $20 range over the last few years despite generally improving results. Symbol has a strong patent portfolio and could benefit from the leadership and worldwide presence that a company such as Motorola could provide."

Jack Gold, principal and founder of J. Gold Associates, a Northborough, Mass.-based research and advisory firm, said the acquisition fits nicely with Motorola's expansion plans.

"From Moto's perspective, they have been trying to get into the customized, ruggedized devices market for some time – other than some very high-profile all-custom deals, like UPS, they have not really been in the space," Gold said. But "Ed Zander (Motorola's CEO) is pushing them to get into complementary areas that are growth oriented and synergistic with their mobile strategy."

"The space Symbol plays in is all of the above," Gold continued. "And what Symbol would bring to the table is beyond the device area. The key from Moto's perspective might be twofold: one would be the major position Symbol has established in the RFID space – together with its significant portfolio of IP – and the other would be the managed wireless space, with its large portfolio of industrial-quality WLAN access points, switches and management technology. Symbol also has a commanding lead in selling to the retail vertical market and a growing presence in healthcare."

Longer term, it will mean that users will have greater flexibility in device choice and support within the enterprise, because one platform will support a whole range of Motorola devices.
Daniel Taylor
Managing DirectorMobile Enterprise Alliance

 According to Symbol and Motorola, the purchase complements Motorola's vision of delivering seamless mobility solutions and strengthens Motorola's breadth of product solutions.

Once the transaction is complete, Symbol will become a wholly owned subsidiary of Motorola and will be the cornerstone of Motorola's Networks and Enterprise business. Motorola said it intends to maintain Symbol's Holtsville, N.Y. headquarters, which will be the core of Motorola's global enterprise mobility business.

According to Gold, the acquisition should bring some stability to Symbol, which has made several executive changes over the past few years.

"Symbol could use some stability," he said, "and the investment that Moto would bring – very deep pockets – could also propel the marketing, something Symbol has not been very good at."

Gold said that there are some caveats, however.

"Moto does not have the best track record when it comes to acquiring companies and integrating them into the organization," he said. "So it would not necessarily be a good long-term play for Moto. But Ed Zander has brought some new drive and discipline to Moto lately, so maybe this one would be different."

Taylor said the acquisition is a sign that the mobile industry recognizes that the mobile enterprise is far more than carrier-provisioned smartphones and mobile email. Those categories are growing, he said, but there's only about 2% market penetration, and the question of delivering solutions to the other 98% remains.

"The answer is the three-tier distribution model so prevalent in the IT industry," Taylor said. "Symbol is strong in wireless LAN infrastructure, RFID and designed-for-business handheld devices …. The acquisition would strengthen Motorola's channel to the enterprise market and would introduce a range of products complementary to Motorola's existing product suite. I can't speak to the organizational or cultural issues, but from a product/strategy level, it looks like a good match."

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