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Motorola to design UMTS 3G phones with Qualcomm chips

Posted: 25 Jan 2008 ?? ?Print Version ?Bookmark and Share

Keywords:UMTS 3G handsets? Motorola? Qualcomm? alliance?

Motorola Corp. announced a UMTS 3G handset alliance with Qualcomm Inc. just minutes after the company unveiled a grim Q4 07 report, including an unexpected prediction that its handset sales will continue to decline.

Motorola said that it will design Qualcomm chipsets into some UMTS 3G handsets. A UMTS effort, built on the W-CDMA air interface and the GSM infrastructure, will compete directly with Nokia, which primarily uses the European-developed standard that has enabled handset pacesetter Nokia to capture 40 percent of the world's handset market share. Nokia sells more handsets than the next three producers combined.

With Qualcomm in a bitter intellectual property battle with Nokia, Motorola may be able to take advantage of the deal with Qualcomm to regain some of its rapidly depleting handset market share.

The Motorola-Qualcomm arrangement, however, won't help Motorola immediately staunch the flow of handset loss; the firm said its 40.9 million handsets shipped in Q4 was down from 65.7 million a year earlier, and the numbers are going to be down "significantly" in the current quarter. Motorola said it will begin to design the Qualcomm chipsets into handsets at the end of the year.

The Q4 report unnerved investors because Motorola had indicated the handset situation was looking up in its Q3 report.

The Q4 report was the first financial statement released by new Motorola CEO Greg Brown, who took over the reins at Motorola from Ed Zander last November. In a statement, Brown said: "We are focused on aggressively rationalizing the company's cost structure and working to get mobile devices back on track."

In its report, Motorola issued a reminder that some of its units are performing well. It noted that revenue was gaining 11 percent in its home digital-entertainment device unit and 35 percent in its enterprise mobility operation, bolstered by sales stemming from its 2007 acquisition of Symbol Technologies.

- W. David Gardner

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