Cisco, Motorola Abandon Wi-Fi/Cellular Venture

Last July, the two companies announced plans to deliver "a seamless enterprise mobility solution that will include Wireless Local Area Networking (WLAN) Internet Protocol (IP) telephony and cellular phone technologies". In other words -- the two would cobble together technologies that would allow mobile handsets to roam seamlessly between WiFi and cellular networks. And the products were supposed to hit the market sometime this year.

It was to be a follow-on to Motorola's CN620, a heavily-hyped device born of a partnership with Proxim Corp. and Avaya Inc.

But Motorola confirmed that it quietly called the deal off late last month, blaming initial carrier uncertainty about the companies' plans.

"Because the development process was so long, instead of bringing the next generation of the CN620 to market, we've decided to bypass that and go right into unified communications," says Lisa Barclay, a spokeswoman for Motorola.

"This was an industry first, and the initial device didn't include features that were important to cellular carriers only," she says. "For the next round, we'll be much more tightly integrated with them. We were really focused on enterprise needs with the first product. We focused on enterprise needs, figuring that the carriers would say that was great... Not so much."

Now that the deal is kaput, a broad launch of a new generation of fixed/mobile convergence devices won't happen until the first half of 2007. Cingular Wireless LLC has been in trials with the CN620, and the plan is to migrate the trial customers to the next-generation phones. There won't be a broad release of the CN620. Barclay declines to say exactly how the company will meet its "unified communications" goals to appease carriers, although industry buzz has been tending toward the Unlicensed Mobile Access (UMA) standard. Motorola has already announced a handset, the A910, that supports UMA.

Industry insiders speculate that the decision to call off the deal with Cisco might have something to do with bad blood between other business units within the companies.

"Motorola got pissed at Cisco because of the Scientific Atlanta acquisition," says one source familiar with the situation. "It made Cisco a competitor in the set-top box market."

"That had nothing to do with it," Motorola's Barclay says. She says the problem was "carrier uncertainty around the value proposition."

That said, Motorola is hoping to support all major PBX systems with its upcoming devices, Barclay says.

"Motorola cannot ignore Cisco's position in the enterprise PBX market and will support them along with Nortel Networks Ltd., Avaya and others," says Ken Dulaney, VP of mobile computing at the research firm Gartner Inc.

Cisco was not immediately available for comment.