Retreat from the RAZR’s edge

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Ironically, the rot set in for Motorola because of the seminal RAZR handset, launched way back in 2004. Certainly, it has traded off its iconic RAZR design ever since, at the expense of genuine product innovation and, as results show, financial profitability.

This year, it has shed 7,500 jobs and 50 per cent of its handset volumes. It has lost its global number two slot to Samsung Mobile. In the UK, where its market share has slipped as low as six per cent, it is currently engaged in an ignominious tussle with LG Mobile just to hang on to fourth spot.

But, behind the scenes at Motorola, there have been significant changes. Chief executive Ed Zander, under whose stewardship Motorola’s fortunes rose and fell during the RAZR-era, stepped down at the start of the month, to be replaced by chief operating officer Greg Brown.

Importantly for the UK business, Mike Fenger, who oversaw Motorola’s rise to the top of the Latin American league of handset vendors, has been drafted in as new senior vice president for Europe, the Middle East and Asia (EMEA).

Fenger’s restructure of the EMEA business sees UK and Ireland general manager Jim Michel (pictured), for the first time, take full control of UK finances, customer accounts and product exclusives.

Michel is optimistic about the plans Fenger has put in place and the new autonomy of the UK operation. Motorola suddenly appears chastened, even frank about its recent failings. And, if the first step to recovery is to identify where you went wrong in the first place, then, just maybe, Motorola has started at last on the road to convalescence.

“We sold millions and millions of RAZR handsets, whether pink, black or some other colour. For 18 months, we could not sell enough of them. We couldn’t meet demand. But maybe that was the problem – that we never looked beyond that success,” says Michel.

He adds: “You know, America always said, ‘we’re number one in North America, we’re number one in Latin America’. They’ve just realised that EMEA is pretty big too – in fact, in terms of margins, bigger than North America, Latin America, China and India put together.”

Restructure

So, Motorola appears to be putting the late wilderness years behind it, and is starting over. Fenger, appointed in November, has put together a three-year plan to resuscitate Motorola in the EMEA region, with the UK business leading the way. The Motorola board in Chicago has given Fenger carte blanche and has been back and forth in recent weeks to “make sure he [Fenger] gets everything he wants”.

“Mike’s a real business individual,” explains Michel. “He’s come here, and he’s the first person we’ve had in charge who’s not just interested in sales. He knows how to run a business; he’s realistic and the staff like him, from the canteen staff right through to the management team.”

The restructure sees Michel, first of all, given charge of the UK balance sheet. His peers across Motorola’s other EMEA units have, likewise, been handed responsibility for their own profits and losses.

At the same time, Motorola has reorganised its customer account management structure. Previously, Motorola’s network buying groups operated at a local level and each, effectively, competed against other regional units, causing huge instability in pricing across its different markets.

Its network accounts are now managed, strategically, at a global level. Product roadmaps are plotted with its network customers 12-18 months ahead of time, and each local business unit is given the flexibility to negotiate customer exclusives and handset variants within the new framework.

The execution of supply and service remains local, says Michel. The new Motorola U9 handset is one instance of the UK unit’s newfound control. Globally, the U9 went out in graphite. Michel’s team negotiated for UK variants in pink and purple, reflecting local consumer demand.

Explains Michel: “We have a lot of influence now within our own market over products, features and colours. The U9 was a local call. We had the global remit about how to push this product out, which didn’t work in the UK from what we saw. We changed it, and came up with something that was different. We presented it to our customers, and it’s gone down very well. That wouldn’t have happened previously.”

The same customer account restructures goes for its distributor and retail partners too, except its multi-market partners Brightstar, 20:20 and Carphone Warehouse are managed at a European level, and its UK-only partners are in the care of Michel’s team itself.

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