Motorola's decision on Friday to split its mobile handset business into a separate company will benefit competitors like Nokia, Samsung and Sony Ericsson in India.
The move to split the company into two separate entities, one to handle handsets and accessories and another for broadband networks and enterprise-level communications services, is expected to be completed in 2009.
Motorola spokespersons refused to comment on the global impact. In India, Motorola's handset sales continue to be under pressure as Nokia, which has in excess of 60 per cent market share, and South Korean Samsung and LG, Sony Ericsson and Chinese entrants Huawei and ZTE are increasing their share in the mobile handset game.
According to industry observers, Motorola has an 11 per cent share in India. The company does not report mobile phones sold specifically in India, but according to data available from research firm Gartner, its global share was 13.1 per cent in the third quarter of 2007. Motorola's market share reduced from 21.1 per cent to 14.3 per cent, and competitor Samsung jumped into the number two slot, according to Gartner. Nokia is the market leader globally with a 39 per cent share.
Analysts see this recent move will allow other phone companies in India to significantly make a dent into Motorola's share. "Competitors, most notably Samsung, Nokia and LG, will probably gain the most during this period," said Leif-Olof Wallin, vice-president (research), Gartner.
"Motorola has a strong brand and presence in important markets like China and India with its Razr series and MotoRokr phones," said an analyst with a Delhi-based research firm who did not wish to be named. Also, the Indian handset segment is seeing increasing sales coming from Tier II and Tier III towns and even handset makers like ZTE, which entered the market a year ago, have sold about 10 million sets. There is room for growth as mobile ownership is just 9 per cent in a population of over a billion, according to industry watchers.