Arris Group wrapped up its $2.35 billion acquisition of Motorola Home from Google on April 17, a deal that makes it the largest U.S. supplier of set-top boxes, diversifies its customer base and prepares it to go toe-to-toe with any broadband and video supplier on the globe.
Arris is also buying a company that’s more than twice its size, presenting challenges as it looks to combine product lines and cultures. It also enables Arris to emerge from the long shadows of top rival Cisco and erstwhile competitor Motorola.
The new Arris emerges with a remolded structure and leadership team. Marwan Fawaz, who’s been running Motorola Home since June 2012, will exit in the months ahead. Arris has no plans to close any Motorola Home facilities, including its former headquarters in Horsham, Pa., but Arris will phase out the Motorola brand within a year.
Arris will be divided into two major product segments: Home Devices and Network & Cloud. Larry Robinson, the former senior vice president and general manager of Home devices at Motorola, will run the device unit; longtime Arris exec Bruce McClellend will helm Network & Cloud.
But the guy running the show is Arris chairman and CEO Robert Stanzione. When word spread that Motorola Home was for sale, few believed that Arris, given its track record of driving hard bargains, would win out. He proved the naysayers wrong and now stands to cement the legacy of both his company and his own career. Now comes the hard part — integrating a large company with a rich and sometimes troubled history (DCT-5000, anyone?), and making the gambit pay off.
Stanzione spoke to Multichannel News technology editor Jeff Baumgartner last week about the deal and its implications.
MCN: Why was it critical for Arris to get Motorola Home?
Robert Stanzione: I think it clearly gives us the scale to compete with anyone in the world. I think it creates a company that’s the premier provider of video and broadband technology in the world. It diversifies our customer base considerably and gives us reach into markets that we up till now had not reached. Bottom line, it’s a transformational deal that accelerates innovation. We can provide value throughout the video delivery chain, from beginning to end, from content management and creation all the way through to the screen in the home.
MCN: Motorola Home brings Arris several complementary and new products, but there are still product lines that overlap, such as cable modems, edge QAMs and CMTSs. Will you keep them all or look to shed some of those assets?
RS: We’re not planning on shedding any assets. We will be combining programs where there are overlaps. We haven’t decided yet exactly how those roadmaps are going to play out. We’ve … communicated to our customers that we’re not going to interrupt any program that has been promised to [for] delivery to a customer.
MCN: What is the biggest challenge ahead?
RS: The challenge will be, as we put these programs together and these teams together, to not lose focus on our customer service, on meeting milestones going forward in the marketplace, things that we’ve told customers that they’re going to get. I would say that my message to the employees of the new Arris is, “Customer is No. 1, and nothing else competes with that priority.”
MCN: You brought up employees. The combined company will have about 7,000. How will the coming integration affect the employee base?
RS: They [those integration decisions] have to be phased in. We’re going to do it as quickly as possible and keep the employees in the loop, to know what’s coming to the very best of our ability.
We know how much streamlining we’ll have to do in total. When we announced the deal, we said we should be able to generate about $100 [million] to $125 million of synergy. It will come from cost of goods, it will come from G&A, marketing and sales, as well as R&D. So it’s kind of spread across, but I emphasize that when we’re finished, we’re going to have more resources, not less resources than what we start out with. We should be even stronger.
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