Software and Services segment generates 40% of total revenues
Motorola Solutions (MSI) is positioned to successfully transition to its Services and Software segment. Approximately 40.0% of MSI’s total revenues originate from this segment.
According to MSI, digital networks are driving demand for outsourcing support and network management of networks. Several of MSI’s clients prefer an operating expenditure funding model compared to a capital expenditure model.
MSI is banking on acquisitions as well as research and development (R&D) spending to drive growth in Managed Services and Command Center Software.
In fiscal 2014, MSI’s recurring revenues comprised less than 20.0% of total revenues. This figure has risen to 25.0%. MSI’s Software and Services revenues are growing at a faster rate compared to its core business. In early 2017, MSI acquired Kodiak Networks, indicating the firm’s focus on growing recurring revenues in Software and Services.
In 2017, MSI hired software executive Andrew Sinclair to lead its Software business. MSI is optimistic about its expanded portfolio of support service offerings to drive demand. The company is also providing services in the analytics, video, and intelligence solutions space.
MSI expects revenue growth of 1.0%–2.0% in its Products vertical, 2.0%–4.0% growth in Services, and higher revenue growth in Software.