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Mar. 22, 2007

In an effort to cut costs and boost margins, Motorola will reportedly use its Linux/Java based mobile phone operating system across "all mid- and high-tier devices." The beleaguered communications company will fall $1 billion short of analyst expectations this quarter, due to a slump in its mobile phone business.

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According to a report at the Chicago-area Daily Herald, Motorola CEO Ed Zander blamed poor earnings on lower unit volumes and greater-than-expected global price competition, particularly in India, Africa, and South Asia.

Speaking with investors yesterday, Zander reportedly confirmed what Motorola told PC Magazine in July -- that it will abandon its proprietary "P2K" RTOS, used in U.S. models such as the Razr, Krazr, and so on. Going forward, the company will adopt a more cost-competitive strategy, simplify its product platforms, and introduce new feature-rich products, Zander reportedly said.

Zander reportedly confirmed that his company will go through with previously announced plans to eliminate 3,500 jobs. It will also increase its stock buy-back plan from $4 billion to $7.5 billion in common and other stock within the next three years.

Additionally, Motorola has promoted Greg Brown, leader of its Networks business, to the long-vacant position of president and chief operating officer. Brown will continue to lead Networks as well as Mobile Devices and Connected Homes, in the wake of mobile phone division leader Ron Garriques's "abrupt" departure, Daily Herald reporter Anna Marie Kukec wrote.

Zander was scheduled to deliver a keynote at the CTIA mobile phone trade show next week, but canceled due to a "personal family" matter, the Daily Herald reports. Its coverage is here.

Motorola is the second-largest mobile phone vendor, with a 21.1 percent marketshare in 2006, according to Gartner. Motorola is especially strong in China, where it has long sold Linux-based phones, and where Linux holds a 30 percent share of the smartphone market, according to China-based market research firm CCID. However, in a recent report, CCID said that the average smartphone selling price in China dropped from RMB3,176 ($411) to RMB2,450 ($317) in 2006.

Motorola recently updated its Linux/Java stack, and together with NEC, NTT DoCoMo, Panasonic Mobile Communications, Samsung Electronics, and Vodafone, helped form the LiMo Foundation, aimed at maintaining a common Linux platform.

Additionally, Motorola was widely rumored to be looking to purchase Palm, maker of the Treo line of Symbian- and Windows Mobile-based smartphones. Motorola earlier lost a bidding war for Palm spin-out PalmSource. However, Merrill Lynch said last week Motorola like would not buy Palm, according to Bloomberg.

Motorola's first Linux-based phone for the U.S. market is expected to be the MotoRizr Z6, a 2.5G GSM/EDGE model featuring a low-cost, single-processor architecture, along with rich multimedia and camera applications.

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