After the Split

On Jan. 4, 2011, Motorola Inc. ceased to exist.

Capping a years-long restructuring process, the company separated into two entities: Motorola Mobility,
which combined the cable set-top and video infrastructure business with the resurgent mobile devices group,
and Motorola Solutions, which merged the enterprise and government communications business units.

Dan Moloney, who joined Motorola in 2000 with the takeover of General Instrument, left in early 2010 but
was lured back last fall by Motorola Mobility CEO Sanjay Jha to be president, overseeing its Home set-top and video segment.
Moloney spoke recently with Multichannel News technology editor Todd Spangler.

MCN: What does the split
mean for the Home group

Dan Moloney: This has
been a long time in the planning.
We had a lot of time to
prepare for it. Our real objective
was to enable the new
company to come out and
be very focused around the
industry, which, for lack of
a better term, is converging
around experiences for the
consumer. … And it allows
us to make key decisions
around acquisitions that
were just plain more difficult
in a conglomerate.

MCN: What kinds of acquisitions
are you looking at?

DM: If you look at the last 12
months, we’ve made several
smaller acquisitions. That’s
really where the focus has
been: bringing in smaller, application-
type companies. In
the last quarter we acquired
Zecter, which is all about content and storage in the cloud
and the home. We acquired 4Home, which is about home
monitoring and home control, management off any screen .

MCN: Sales for Motorola’s Home group declined 7% in
2010. What accounted for the drop?

DM: If you look at the macroeconomic conditions, there’s really
been an overhang in Home for the last 12 to 18 months.
Certainly in the U.S., which is the largest market for us for
Home products — it comprises 75% of our total Home business
— the issue of the reduction in occupied housing drove
the operators to have additional supply of set-tops and other
products because they just didn’t have as many homes they
were serving at the time.

I will say, this is also a business that in some of its traditional
product areas is approaching maturity and saturation.
I haven’t run the data lately, but [cable operators have] 70%
to 80% digital [video] penetration. That puts a little different
spin on the growth. But there’s another growth cycle coming.

MCN: What are the growth areas?

DM: We see four areas. First, the transition to [Internet protocol]
in the home is going to result in the evolution of the
traditional set-top into IP gateways. It’s a transition that
creates an opportunity. Second is the network itself — the
headend part of it that is going to go through this transition
as well, as ultimately we get to an architecture that delivers
IP based video.

I think the third opportunity is really outside the U.S. The
fourth area is really around application service-enablement
from the cloud. It’s new to the industry and new to us. Our
Medios [multiscreen service-management software suite]
and edge products, and other cloud services into the equation
that we haven’t talked about yet, will create a new business
model for us.

MCN: A lot of the focus for TV operators is delivering video
to tablets, mobile phones, PCs and Internet-connected
TVs. Doesn’t that translate into fewer set-tops and DVRs
shipping out the door?

DM: Yes — look, if you fast-forward a number of years, and
we can speculate how far out, the model becomes more IP
content delivery. The value of a gateway in the home continues
to be very important. I think it’s an intelligent gateway,
and there’s a host of clients that hang off that gateway.

The traditional model of set-tops is going to change and
evolve, there’s no doubt about it. Today our business is
about 75% home devices and about 25% predominantly
infrastructure. I think as time goes on, that mix is going
to change between those two.

MCN: Charter and Suddenlink have recently struck deals
to offer TiVo DVRs, saying traditional cable technology
suppliers are not delivering any innovation to the market.
What’s your response to that? [Editor’s note: After this
interview, Motorola Moblity on Feb. 26 filed a patentinfringement
suit against TiVo.]

DM: I will tell you we have strong relationships with the operators
you mentioned. We understand what they did with
TiVo. But in either case, I don’t believe it’s their longer-term
strategy. We believe some of the things we’re working on
with them for the long term position us well.