Motorola 2006 Annual Report Download - page 44

36 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
designed in partnership with PRODUCT(RED), to raise awareness and money for The Global Fund, an
innovative public-private partnership created to finance a dramatic turnaround in the fight against AIDS in
Africa with an emphasis on women and children.
Additionally, the Mobile Devices business continued its expansion into previously underserved markets,
in connection with the Company's ongoing effort to connect ""the next billion'' mobile phone users.
Working closely with the GSM Association (""GSMA''), Motorola has enabled economic and social
development by providing affordable, high-quality access to mobile communications in such markets as
India, the Philippines, Indonesia and Africa. Most recently, Motorola advanced its efforts to redefine the
mobile phone marketplace with the launch of the MOTOFONE handset, the first of a new breed of
handsets designed to disrupt today's communications landscape by cutting across price tiers, product
segments and international markets.
The Mobile Devices business also sought to improve its product offerings through strategic acquisitions.
The business acquired TTP Communications plc, a developer of intellectual property used in the design and
manufacture of wireless communication terminals and a leading provider of protocol stack software that
offers rapid customization of handsets through its AJAR applications framework. In early 2007, the business
completed the acquisition of Good Technology, Inc., a leader in enterprise mobile computing software and
service. The acquisition is expected to extend Motorola's mobile computing capabilities while also
increasing the Company's enterprise client base.
The Mobile Devices business did face significant challenges during the year, particularly towards the end
of the year. In the fourth quarter, the business was negatively impacted because its forecasts of the overall
pricing, mix and volume in its GSM business proved to be incorrect. Also, the business failed to capitalize
on the strength of the UMTS market and was impacted by challenges in our iDEN business in the United
States. As a result of these challenges, Mobile Devices' fourth-quarter profitability fell significantly short of
our expectations and ASPs and gross margin as a percentage of sales both decreased in 2006 compared to
2005.
‚In Our Networks and Enterprise Business: One of Motorola's most important initiatives in 2006 was to
strengthen our position in enterprise mobility. Building on our Networks and Enterprise business' record
$11.2 billion of sales in 2006, Motorola significantly expanded its presence in the enterprise space. In
January 2007, we completed the acquisition of Symbol Technologies, Inc. (""Symbol''), an industry leader
in designing, developing, manufacturing and servicing products and systems used in end-to-end enterprise
mobility solutions. Symbol has a world-class product portfolio and valuable intellectual property and will
be the cornerstone of the Networks and Enterprise business' enterprise strategy.
Motorola also initiated a new collaboration with Huawei Technologies to bring an enhanced and
extensive portfolio of UMTS and high speed downlink packet access (""HSDPA'')/high speed uplink packet
access (""HSUPA'') infrastructure equipment to customers worldwide. One of the elements of this
collaboration is the creation of a joint research and development center in Shanghai, China, where
employees from both companies work on development of the architecture and portfolio of products and
services.
In the public networks market, Sprint Nextel selected Motorola to play a major role in the Sprint Nextel
WiMAX infrastructure roll-out. Motorola has been a long-standing proponent of WiMAX and is now
participating in 22 WiMAX trials globally. As the exclusive supplier of iDEN technology and a major supplier
of CDMA and EV-DO Revision A technologies, the Company offers a complete, end-to-end solution and is
uniquely positioned to expand the seamless mobility experience into the wireless mobile broadband market.
Motorola also maintained momentum in infrastructure development and services in 2006 by continuing
to deliver outstanding technologies and services for wireless and wireline carriers. Through 2006, the
business has 55 commercial deployments of push-to-talk over cellular (""PoC'') technology with customers
operating in 39 countries. The Company's IP Multimedia Subsystem (""IMS'') technology and Open Mobile
Alliance (""OMA'') PoC standards compatible solution lays the foundation for further ""Push-To''
applications.
During 2006, the business continued to refresh and redefine its product portfolio. It completed a
number of significant acquisitions, including: (i) Orthogon Systems LLC, a leader in wireless Ethernet
connectivity and orthogonal frequency division multiplexing (""OFDM'') technology for fixed wireless
equipment, and (ii) NextNet Wireless, Inc., a former Clearwire Corporation subsidiary and a leading