LITTLE ROCK — Motorola Inc., whose phone business has lost more than $4 billion since 2007, is devoting most of its investment in smartphone software to Google Inc.'s Android, aiming for a larger share of the market for Websurfing devices.
"We're doing an entire business based around this platform," Christy Wyatt, Motorola's vice president in charge of software platforms, said last week. "If you talk about the mid- to high-tier portfolio, the only platform-level investment we're making at this point is in Android."
The company, which hasn't released a bestseller since its Razr handset five years ago, said it will unveil the Android devices on Sept. 10 and expects to have two phones ready for the Christmas season. Its Android line may account for half of the company's handset revenue next year, predicted Matt Thornton, an analyst at Avian Securities LLC in Boston.
Motorola is one of at least five companies expected to introduce Android-powered units in the next 12 months to tap consumer demand for smart phones. Sales of the Web- and email-equipped devices climbed 27 percent worldwide in thesecond quarter as mobile-handset sales overall dropped 6.1 percent, according to Stamford, Conn.-based research firm Gartner Inc.
"Android will be the dominant platform for these guys over time," Thornton said. "They're thinking about Android in not just the traditional sense of smart phones but at all price points."
How quickly Android grows beyond a year from now depends on its popularity with customers and the success of future versions of Microsoft Corp.'s Windows Mobile operating system, used in some Motorola phones, he said.
Wyatt said that Motorola, based in the Chicago suburb of Schaumburg, is interested in the 7.0 version of Windows Mobile expected next year. "We never want to close off an option."
Motorola spent $1.6 billion on research and development in the first half of this year and generated one-third of revenue from mobile-phone sales. It also makes walkie-talkies and TV set top boxes.
Thornton said the company's commitment to Android means it probably spent disproportionately on the phone unit.
Wyatt declined to say how many employees are working on Android devices or how much the company is spending to do so.
"It's not five guys and a Web site," Wyatt said. "The team is probably as significant an investment if not more so than the likes that I've had when I've been at Apple or Palm."
Motorola is developing smart phones that run on Google's open-source program to help it take on Apple Inc.'s iPhone, Research In Motion Ltd.'s Black-Berry and Palm Inc.'s Pre, and to reverse a 37 percent sales drop in the past two years. Google started Android in 2007 as part of an industry effort to devise free software for phones open to programmers who want to create games or other features for it.
Android should add more applications as new handset makers come on board including Motorola, said Andy Rubin, vice president of mobile platforms at Mountain View, Calif.-based Google.
"That gives a bigger market opportunity for third-party developers to build their applications," Rubin said in a recent interview.
He said Android doesn't have to match the number of applications available for the iPhone.
Android's marketplace has more than 8,000 applications for download, up from 6,300 about three months ago.
Palm offers 41 applications to users of the Pre, RIM offers more than 2,000 for the BlackBerry. More than 65,000 are available for the iPhone. Spokesmen for both companies declined to comment. Natalie Kerris, a spokesman for Apple, didn't immediately respond to a request for comment.
The market for smart phones is still new, Rubin said.
"Market-share wise, we all have a long ways to go," he said.
Still, Motorola's bet on Android technology may give it an edge over RIM and Palm, which vet developers, as it challenges Apple for users, said Charlie Wolf, an analyst at Needham & Co. in New York.
"The name of the game is going to be applications going forward in terms of which smart phones sell best, and the two contenders are the iPhone and Android," Wolf said.
Business, Pages 21, 22 on 08/31/2009