Motorola Inc. is spinning off its mobile-phone business from its broadband business in 2009, forming two independent, publicly traded companies.
Crucial questions: Which part gets the valuable Motorola brand, and under what terms? In announcing the move Wednesday, CEO Greg Brown said the issue was still to be decided.
According to Michael Thibodeau (pictured), managing partner at brand consultancy Verse Group, the company's previous decisions in this realm aren't encouraging. "Motorola is an interesting company because it has gone through a lot of spinoffs, but it doesn't spin off in the smartest way. For instance when Freescale Semiconductor was launched in 2004, the company lost customers because it had to backtrack and establish itself as a brand," he said in an interview.
At least in the medium term, a licensing relationship would be typical, enabling the two sides to share the brand. But Thibodeau still foresees a possible "tug of war over the Motorola brand name and reputation."
Thibodeau points out that the 2007 value of the Motorola brand (as
determined by Interbrand) was over $4.1 billion. That's a striking number since, as reported in this Bloomberg
article , the handset business may actually be worth less than that. "We imagine that
ownership of the Motorola brand name will greatly benefit whichever
business it ends up with. Even with an endorsement, it will be years
before the other business is able to establish a reputation that
commands that much value."
Another potential pitfall would be allowing both sides to use the brand for too long. "We hope that Motorola does not make the same mistake as Tyco, giving multiple independent businesses the same brand name. Although this shared-name approach may work in the short term, it would likely lead to confusion in the long term as both businesses evolve. Who owns the URL? How might the actions of one company affect the reputation of the other company?"
In a timely report called "
The ABCs of Branding Corporate Spinoffs," Thibodeau lists common mistakes companies make. Among them: a focus on creating just a new name and logo rather than a reputation, and making a splash on launch day but failing to put aside money for all the facets of brand-building -- including advertising, sales support, investor presentations and communications, and more -- later on.
- Maria Woehr
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