Motorola splits in two to kick off 2011

Motorola Inc. is splitting up.

The company best known for its radio communications products will become two separate entities, Motorola Mobility and Motorola Solutions, within the next few weeks.

“I think our CEO, Greg Brown, was actually the individual that first really brought up the idea. He felt that a laser-like focus on consumer mobility devices was important and then a laser-like focus on the enterprise and government business,” said Jim Mears, corporate vice president at Motorola, who has led the federal sector of the company for the past four years.

“They’re really two different businesses and to really unlock the value as two different organizations it was critical to split them into two so they can survive and grow on their own,” he explained.

Mears and his team will transition into Motorola Solutions to serve federal, state and local government clients. That company will be led by CEO Greg Brown.

“Then, what you typically think of Motorola sometimes in the cellular phone and what we call the cable [TV] set top box business, those two businesses will be Motorola Mobility,” Mears said.

Motorola Solutions will continue the company’s 80-year tradition of building radio systems, but now with a focus on wireless voice, video and data communications available commercially or as specialized, mission-centric products for the Defense Department and public safety professionals.

Mears acknowledged that under the former single-company structure, there was a feeling that perhaps too much investment was going to the cellular phone segment, a business that has had its ups and downs the past several years.

“The advantage for Motorola Solutions will be [that] all our investment will really be targeted at public safety and enterprise because cellular will be off on its own,” he said.

Although Motorola has always invested in public safety and the enterprise, that investment will now be more focused and targeted. The result will be more rapid innovation of next-generation, hand-held radios for first responders and hand-held computers for DOD and civilian law enforcement agencies, Mears said.

Each company will be a separate, publicly traded entity offering its own stock, with Motorola Mobility becoming about an $11 billion to $12 billion revenue company and Motorola Solutions at $8 billion to $9 billion in revenue.

“We will continue to maintain and have some growth as the government continues to upgrade to wireless digital communications,” he said. “But our big growth engines moving forward really are in the hand-held computing arena, especially in logistics and military health care, and [the Veterans Affairs Department].”

Mears predicts greater sales opportunities for Motorola Solutions as the VA and other government health care agencies transition to hand-held computing devices for electronic medical records.

“There will be a lot of competition,” he said, “But we feel like we’ve got a great pipeline of products to compete and win in that particular space both in the federal government and in the commercial space as well.”

Motorola Solutions will benefit from its parent company’s acquisition about four years ago of Symbol Technologies, a provider of hand-held computer devices.

“That put us right in the sweet spot of mobile computing, both in the enterprise and in the federal government,” he said.

Motorola Solutions also will inherit some existing Homeland Security Department projects along the U.S.-Canada and U.S.-Mexico borders.

“On the federal government side, 99 percent of what we were doing as Motorola Inc., whether you’re talking about DHS, Department of Justice, DOD, civilian agencies, that was all my business any way,” Mears explained. “That piece won’t really change. We’ll continue to do business as we have in the past, just with more innovation moving forward, which I think is good for all of us.”

Most of the company’s participation in the large federal contract vehicles, such as Alliant and Networx, come through Motorola’s partners, some 1,000 small and mid-size systems integrators, Mears said.

The new company also will continue to partner with large contractors such as Northrop Grumman Corp., General Dynamics Corp., CACI and others, he added.

As for future growth of Motorola Solutions, that’s likely to come initially through acquisitions. There are no immediate plans to grow organically.

“More hiring would relate to newer business that we may get into,” Mears said.

“For the most part we have stayed relatively flat to [having] slightly grown our employment base in the federal space over the last couple of years,” he said. “We wouldn’t necessarily go hire a lot of people unless we were grabbing a new piece of a new market that we didn’t previously serve.”

Mears said he foresees growing opportunities in two areas, the federal government’s move toward managed services to reduce operating costs and the current momentum to transition land-mobile radio voice and data applications to the rapidly expanding wireless capacity being built by the consumer telecommunications industry.

“Our customers are asking for those choices today, so I think in the next couple of years you’ll see some of our customers probably moving in that direction,” he said.

Although Motorola Inc. headquarters has long been located in Illinois, the federal sector will retain its strong presence in the Washington, D.C., area, with its main office in Columbia, Md., a field office in McLean, Va., a worldwide service depot for DOD in Lanham, Md., and a government relations office next to the Willard Hotel in Washington.

Motorola Inc., of Schaumburg, Ill., ranks No. 91 on Washington Technology’s 2010 Top 100 list of the largest federal government contractors.