Motorola CEO plans to keep focus on smart phones

Android-based devices remain key as handset maker prepares for spin off.

SAN FRANCISCO -- The co-CEO of Motorola Inc. told investors Thursday morning that the company can carve out a strong piece of the fast-growing smart phone market despite the fact that it lacks its own mobile operating system, which has proven to be a distinct advantage for rivals such as Research In Motion Ltd. and Apple Inc.

At an investors conference sponsored by Barclays Capital, Sanjay Jha said Motorola /quotes/comstock/13*!mot/quotes/nls/mot (MOT 6.92, +0.16, +2.37%) plans to remain focused on the Android OS developed by Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 490.51, +0.05, +0.01%) . The company has launched a handful of devices on the platform and plans to release more later this year.

Reuters
Motorola Inc CEO Sanjay Jha with the company's Cliq smart phone.

"I would say that OS alone is not what consumers base their decision on, though it has become meaningfully more important," Jha said. "The look and feel of the device still matter."

Jha was responding to questions about how Motorola can differentiate itself against RIM's /quotes/comstock/15*!rimm/quotes/nls/rimm (RIMM 61.72, +2.40, +4.05%) BlackBerry family of smart phone devices as well as the popular iPhone from Apple /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 255.22, +1.87, +0.74%) . The BlackBerry and the iPhone are the top-selling smart phone devices in the U.S. market, and analysts widely attribute much of their success to their tightly integrated operating systems.

Motorola, on the other hand, has chosen to go the route of using Google's Android to build its smart phone family. The company launched its Droid handset late last year with Verizon Wireless /quotes/comstock/13*!vz/quotes/nls/vz (VZ 27.50, -0.08, -0.29%) , and has since added the Cliq and Backflip -- the latter of which launched at AT&T /quotes/comstock/13*!t/quotes/nls/t (T 24.60, -0.03, -0.12%) , where it competes directly with the iPhone.
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When asked whether the company would consider building or acquiring its own OS, Jha said there is always a possibility, but that "nearly all of my focus is on Android today." He noted that any mobile OS would need to be able to match Android's capabilities, including free navigation and voice-activated services.

"I think it's possible to be negatively differentiated by having a platform that does not have those capabilities," he said.

The Droid has been a strong seller at Verizon, which gave the product heavy promotion through the first quarter of this year. However, there has been some concern that a new competing product -- the HTC Incredible -- will eat into sales of the Droid as Verizon shifts its focus to the newer product.

However, Avian Securities told clients in a note Thursday morning that shortages of the HTC Incredible seem to be helping sales of the Droid as the "closest comparable" device to the Incredible.

Jha also indicated strong sales of the company's other handsets. He noted that the company now has more than a million subscribers to its Motoblur service, which helps users integrate social networking services to their mobile devices. The Motoblur service is not available on the Droid.

Motorola is planning to separate into two publicly traded entities by early next year. Jha will continue to run the handset business, which will be combined with the company's cable set-top box business. He said Thursday that plans remain on track to accomplish the spinoff.

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