Motorola's new line of handheld computers may eat into Symbol Tech.'s market share

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Author: Ken Schachter

Story Type: News

Some big headlights are looming in the rearview mirror of Symbol Technologies.

Motorola Inc., the No. 2 mobile phone maker, has launched the first of a new line of handheld computers aimed squarely at Symbol's juiciest profit center.

The tool of Motorola's offensive into "off-the-shelf" handheld computer market is the HC700-L, launched Oct. 17. The device, tested to stand up to military toughness standards, has an imager for barcode scanning and circuitry to give it Bluetooth and WiFi wireless networking abilities.

"That's right up Symbol's alley," Weeden & Co. analyst Kevin Starke said of the new Motorola device. "Symbol needs to watch out for this."

Mobile computing, which includes handhelds, accounted for sales of $233.6 million in the quarter ended June 30, about two-thirds of the company's total sales of $355.7 million.

But if Motorola's most recent quarterly sales of $9.4 billion dwarf Symbol's revenue, in the world of rugged handheld computers sold to corporations, the Holtsville company is the Big Cheese.

Figures from market researcher Venture Development Corp. rank Symbol as the top enterprise handheld provider with 31.1 percent of the $2.1 billion market. Motorola, meanwhile, languishes barely above 3 percent.

VDC forecasts the market will grow to more than $2.7 billion by 2007.

"They're not a major player, but they are a large company," said Chuck Dourlet, vice president of marketing for Symbol's mobile computer group. "We take this very seriously. It will be interesting to see how this unfolds."

One reason for Motorola's puny market share is its concentration - up to now - on building custom handhelds for a few large customers like FedEx and the U.S. Postal Service, Starke said.

"We've been doing this for many years successfully, but it has been more customer based," said Lisa Barclay, a Motorola spokeswoman. "This is our way of taking our expertise and bringing it to a wider marketplace."

Barclay said Motorola's plan is to sell corporations a variety of devices, such as the HC700-L, the Q handheld with a QWERTY keyboard and e-mail capability and a line of mobile phones all of which can run on the same software platform.

"That's Motorola's strategy," she said. "It's how all the devices work together. It's better for a CIO to have a unified platform instead of all these separate devices."

That cross-selling plan echoes the playbook long used by Symbol in outfitting companies with handhelds, stationary scanners, radio-frequency identification gear and wireless networking equipment.

"Customers won't just buy a product, but several products across the company," Dourlet said. "It's having wireless infrastructure that we sell in addition to our RFID division and advanced data capture, such as the barcode scanners you see at checkout. It's the entire suite."

What hurdles will Motorola face in elbowing onto Symbol's turf?

Dourlet said the Schaumberg, Ill., giant will have to build up its sales force and move beyond its direct-to-customer approach.

Future models of the HC700 line will include models with cellular phone, walkie-talkie and global-positioning system features.

Should Motorola really covet the handheld market, Starke said, there's always the possibility the electronics giant could gobble up a rival with a recent market capitalization under $2 billion.

"It's another good reason for Motorola to buy Symbol," he said.

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