Motorola Says No Go On ODMs
By Mike Masnick, Sat Jan 22 03:00:00 GMT 2005

Motorola has had some difficulties getting its Microsoft Windows-based smartphones to market. A report now suggests the delay has to do with problems in its ODM relationships with Taiwan-based manufacturers.

Motorola has received plenty of attention for its new line of phones based on Microsoft's mobile operating system. Some of the phones appear to be quite innovative. However, the phones have been slow to actually get to market, accompanied by rumors of development problems. A report out of Taiwan is suggesting that Motorola is bringing future manufacturing of the devices in-house and will stop placing orders with any Taiwanese-based original device manufacturers (ODMs).

What's most interesting about this move is that the move to utilize ODM deals has been a trend widely discussed as the next generation way for handset makers to build phones. The prediction was that the phones would become commodities, and the ODMs would make them cheaper and more efficiently, while the handset companies would still do the design, branding, marketing and partnerships. Just as "fabless" semiconductor companies became all the rage, this would be a situation where manufacturing-less handset developers would be the wave of the future.

However, the announcement that Motorola is putting the breaks on such plans suggests that perhaps it's not that easy for an ODM to simply step in and build the perfect phone all the time. It's not entirely clear what the problem here was, but clearly Motorola was not happy with the end products coming out of its existing ODM relationships. ODMs obviously do have a place in the market, but handset makers need to remember that its their reputation on the line, rather than the ODM's reputation.