Motorola back from the brink


Motorola’s business strategy has changed fundamentally. It no longer relies on one flagship product for its bounce in the market, as it did with its iconic RAZR range for so long. It has announced it will deliver 20 handsets to market this year, and the vast majority will run on Google’s Android platform, which has breathed fresh life into the American manufacturer.

Motorola marketing director Tom Satchwell points at the changes in consumer demands, plus changes within the business itself, for its new attack on the market. “Winding back the clocks, it’s amazing to see the success we had with the RAZR,” he says. “I was in charge of the launch in Europe, and we’ve had many case studies on that phone. It still makes the headlines today. But Motorola as a business has changed since Sanjay [Jha, co-chief executive] stepped in 18 months ago.”

At the same time, Apple has showed very successfully it is still possible to rely on one model principally, with its iPhone series. Still, Satchwell claims that type of RAZR/iPhone success is very rare in this market. In fact, statistically Motorola’s first handset after its slump period, the Dext, sold better than the iPhone in the fi st 74 days in the market, according to Flurry Analytics. The iPhone shipped one million devices in the first 74 days, whereas Motorola sold 1.05 million Dext handsets.

Of course, there is an argument in there about the iPhone opening up consumer demand for such products from a standing start, and Motorola riding its coattails, buoyed also by Google. And even those who have proclaimed Google’s Nexus One a failure on the back of the Flurry Analytics estimate (it only sold 135,000 in the same timeframe) might be made observe relative distribution constraints of the products.

But, still, Satchwell is fairly cheerful about Motorola’s late return from the wilderness. “We are very pleased with the response to the Dext and Milestone (aka Droid in the US). We are picking up pace in the market and are proving to be a strong competitor.”

Financial performance
Last year, Motorola’s quarterly sales figures were pretty stagnant sequentially – an average of $1.8 billion each quarter. And it managed to sustain its income from sales regardless of a drop in handset shipments from 13.6 million to 12 million between the third and fourth quarters of the year. It is also close to reversing its deficit gap and becoming profitable again. At its lowest point, in Q3 2008, it reported an operating loss of $840 million. That figure was $132 million at last count.

 “We’re growing in the right direction,” says Satchwell. “The growth of our smartphone sales has certainly helped and we are very satisfied with the trajectory the business is taking. We have made massive progress.”

In the UK, Motorola is yet to distribute the Dext and Milestone broadly, like it did with the RAZR, which filled every channel going. It is selling the Dext exclusively through Orange and the Milestone through Carphone Warehouse, online retailer eXpansys and handset distributor Data Select.

Satchwell says Motorola will look to broaden its channel reach, mainly with networks for its Motoblur devices and online channels for its Android-only handsets. Its social-networking Motoblur devices provide a good marketing hook for networks’ data tariffs, reckons Satchwell.

Full article in Mobile News issue 461 (April 12, 2010).

To subscribe to Mobile News click here