It’s early days yet. But close on the heels of Tata’s acquisition of Jaguar and Rover, Videocon’s Venugopal Dhoot’s expression of interest to acquire Motorola has taken many by surprise. Will Dhoot be able to pull it off? By aditi prasad
There is some truth
in this reasoning. In the fast paced global telecom handset race, Apple, Samsung, and Research in Motion (owners of Blackberry) have beaten Motorola fair and square on the technology and innovation front (before and after the Razr launch in 2003, Motorola has been unable to deliver any winning models), the two key drivers of the business; while Nokia remains way ahead of all competitors in a virtually unassailable position. “If an engineering giant like Motorola has been unable to innovate against Nokia, how does Videocon propose to take on the task?” says an analyst, refusing to be named.
Videocon’s record has not been particularly impressive in the past. The company had a virtual monopoly in the consumer durable segment, but when the likes of Samsung and LG came into India; they were reduced to a peripheral player. Till today, Videocon is struggling to gain back its market leadership position. “Videocon should understand that its core business is that of consumer durables and not handsets,” points out Ravishekhar Pandey from Springboard Research.
Besides, given that Motorola’s board has still not officially reacted to Dhoot’s bid, for all we know Motorola itself may refuse to sell its handset unit to Videocon or any other potential buyer, in the hope of its imminent turnaround after the split. In fact, the new Chief Executive at Motorola is upbeat about the prospect of the struggling handset business and expects the split to “enhance the pace of recovery in mobile devices and pave the way for its return as a leader in the industry.”
Be that as it may, if the deal goes through, one cannot totally discount the positive influence it will have on Videocon’s fortunes in the global telecom industry. In one fell swoop, from being a virtual nobody; Videocon will become the third largest handset-maker in the world, marginally behind Samusng and Nokia. Specifically, the group will gain access to one of the world’s most important telecom markets – the US – that boasts nearly 250 million mobile subscribers. Interestingly, while Nokia rules the roost globally, Motorola is the undisputed leader in the US handset market with a dominant 34% market share. Nokia trails behind at a poor fourth position.
According to some analysts, Motorola’s dominant position in the US market, where bundling offers (telecom service operators combining handsets as a part of new connections) are the name of the serious telecom game, is living proof of Motorola’s ability to gel well with the concept of handset bundling. And in the fastest growing telecom markets of the world viz. India and China, ‘bundling’ is indeed the next generation catchphrase for both handset-makers and service providers, which will provide Motorola-Videocon an inherent advantage in these markets.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).
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There is some truth
in this reasoning. In the fast paced global telecom handset race, Apple, Samsung, and Research in Motion (owners of Blackberry) have beaten Motorola fair and square on the technology and innovation front (before and after the Razr launch in 2003, Motorola has been unable to deliver any winning models), the two key drivers of the business; while Nokia remains way ahead of all competitors in a virtually unassailable position. “If an engineering giant like Motorola has been unable to innovate against Nokia, how does Videocon propose to take on the task?” says an analyst, refusing to be named.Videocon’s record has not been particularly impressive in the past. The company had a virtual monopoly in the consumer durable segment, but when the likes of Samsung and LG came into India; they were reduced to a peripheral player. Till today, Videocon is struggling to gain back its market leadership position. “Videocon should understand that its core business is that of consumer durables and not handsets,” points out Ravishekhar Pandey from Springboard Research.
Besides, given that Motorola’s board has still not officially reacted to Dhoot’s bid, for all we know Motorola itself may refuse to sell its handset unit to Videocon or any other potential buyer, in the hope of its imminent turnaround after the split. In fact, the new Chief Executive at Motorola is upbeat about the prospect of the struggling handset business and expects the split to “enhance the pace of recovery in mobile devices and pave the way for its return as a leader in the industry.”
Be that as it may, if the deal goes through, one cannot totally discount the positive influence it will have on Videocon’s fortunes in the global telecom industry. In one fell swoop, from being a virtual nobody; Videocon will become the third largest handset-maker in the world, marginally behind Samusng and Nokia. Specifically, the group will gain access to one of the world’s most important telecom markets – the US – that boasts nearly 250 million mobile subscribers. Interestingly, while Nokia rules the roost globally, Motorola is the undisputed leader in the US handset market with a dominant 34% market share. Nokia trails behind at a poor fourth position.
According to some analysts, Motorola’s dominant position in the US market, where bundling offers (telecom service operators combining handsets as a part of new connections) are the name of the serious telecom game, is living proof of Motorola’s ability to gel well with the concept of handset bundling. And in the fastest growing telecom markets of the world viz. India and China, ‘bundling’ is indeed the next generation catchphrase for both handset-makers and service providers, which will provide Motorola-Videocon an inherent advantage in these markets.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).
Read these article :-
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
ZEE BUSINESS BEST B SCHOOL SURVEY
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