Since the start of this century, the manufacturer’s glories have gone from minimal to non-existent. The big question about the ‘untouchable’ of the 1980s centres on its future – and does it even have one?
Motorola’s story reads like a “rags-to-riches” fairytale – only in reverse. Older heads in the industry will know Motorola as the pioneer of the mobile space, a brand which transformed and shaped the future in communications. Today, it’s a very different story.
Back in the 1980s it was untouchable. In the early “Noughties” it was the brand to own with the V3 (which we’ll come to shortly). But since then its glories have been minimal to non-existent.
In fact, but for a few value-focused handsets (Moto G, E), the biggest news surrounding Motorola has largely centred on its future – and if, indeed, it has one at all.
Where did it all go wrong?
Its story began in its US home market in 1973, working in partnership with US telecoms giant AT&T.
That year, on April 3, the two made history by developing the world’s first non-commercial portable phone – the DynaTEC (Dynamic Adaptive Total Area Coverage, pictured above) – and by making the first-ever wireless phone call.
Motorola researcher and executive Martin Cooper (pictured), made that call to Dr Joel S Engel of Bell Labs, using handheld, subscriber equipment. The prototype phone used by Dr Cooper weighed a whopping 1.1 kilos (more than a litre of water) and measured 23cm long, 13cm deep and 4.45cm wide. The prototype offered a talk time of just 30 minutes and took 10 hours to recharge.
In 1984, Motorola achieved another world first by launching the commercial, handheld mobile phone, the DynaTAC 8000X, available for a cool $3,995 ($9,000 or £5,600 in today’s money). And whilst it was classed as a mobile – users needed a strong arm, with the device measuring 13 x 1.75 x 3.5 inches and weighing a hefty 800 grammes, the same as a litre of water – its battery offered just 30 minutes of talk time from a full charge.
Motorola continued to stay one step ahead of rival mobile manufacturers, which included Nokia Mobira, throughout the Eighties and then launched the MicroTAC in 1989. Weighing 340 grammes and measuring 6 x 2.25 x 1 inches, it compared well in terms of portability with Nokia’s Mobira Cityman 900, which launched in the same year and weighed 800 grammes. The MicroTAC was also the first “flip phone”, starting an industry trend that has lasted to the present day; Samsung’s latest, the W2014, costs £1,000.
Rise of the Yuppy
Despite the size of the early device range, and limited functionality and coverage, demand was extremely high, particularly amongst young urban professionals, commonly dubbed as “Yuppies”.
The launch of Motorola’s smaller “Personal Phone” in 1992, continued the firm’s early rise, going on to sell six million units. However, in the same year Nokia was fast on Motorola’s heels with its Nokia 101, its sales topping five million.
Digital Phone Company chairman Phil Rider (pictured right) begun his career in telecoms working as an account manager for Nokia between 1987 to 1992, during which time Nokia overtook its rival as the world’s biggest manufacturer.
“Back in the Eighties everybody bought Motorola because it was the only iconic phone in the industry. The Motorola 8000 and 8800 – the bricks – were the products which allowed the public to realise they could now go anywhere and be on the telephone. It was a major moment back then.
If you’ve ever seen the film Wall Street with Gordon Gekko, that is the archetypal image.
“Back in the 1980s they were number one with a 30-odd per cent market share. During my time, Nokia came from five per cent market share to 35 per cent, and took over from Motorola as number one.”
Competition in telecoms really began to increase in 1996 following the launch of the first GSM SIM cards, subsidised handsets and the creation of prepay. Mobile was then accessible to all, and new entrants flooded the market; Motorola, Nokia, Panasonic, Ericsson, Siemens and even Mitsubishi seemingly the front runners at the time.
That year, Motorola launched its first GSM device, and first flip-design, the StarTac. The device was an instant hit, selling a staggering 60 million units as mobiles went mainstream for the first time. Whilst Motorola become synonymous with clam shells, Nokia’s handsets became easily identified by their simplistic “candybar“ design – something which began to appeal greatly to the public.
For example, in 1998, Nokia launched the 6120 and sold 21 million units – that year becoming the world’s most popular device.
In 1999, sales of Nokia’s 3210 topped 150 million units, with its follow-up a year later, the 3310, passing 126 million, making them the biggest selling handsets ever at that time.
To draw a comparison, the iPhone 5 for example, Apple’s biggest-ever selling handset, has sold around 89 million units globally since launching in 2012. Samsung’s Galaxy S3 sold more than 40 million units between May 2012 and January 2013.
But Motorola wasn’t done and struck gold in 2004 with the release of the RAZR V3 – a device which some analysts claim had as big of an impact on the market then as the iPhone did in 2007. The V3 was an instant hit with both business and consumers, thanks to its then unique design.
It was also arguably the first device sold on design rather than features. It was built from aluminium and became the thinnest handset ever built at just 13.9mm. It also included the first flat keypad and quad band technology, giving it global appeal, particularly amongst business travellers.
Despite a hefty price tag, topping more than £500 SIM-free in the UK, the device shipped more than 50 million units in the first two years.
The success of the RAZR V3 saw Motorola’s global mobile market share grow from 15.5 per cent in 2004 to 18.2 per cent in 2005 and then to its peak of 20.7 per cent in 2006 (statistics from IDC and Gartner).
Out of ideas
However, the success was relatively short lived. The manufacturer, according to those there at the time, became complacent – continuing to keep the V3 alive by releasing numerous colour variants over the next few years. The device, once seen as a premium model in the market, was eventually selling for just £50 in Carphone Warehouse.
Motorola made numerous spin-offs but with minimal software updates over subsequent years, they largely failed to recapture their market audience.
Spin-offs from the RAZR V3, included the V3i, which added an MP3 player that was compatible with iTunes, and a flash memory slot to store pictures. It and other variants, the V3c and V3m, added features such as extra memory, a sharper camera and improved battery life, rather than major changes. Models also included: V3X, V3XX, Z3, KRZR K1, V6, W510, KRZR K3, W380, W395, V8, V9 and the V1100.
A more traditional candybar model was also launched, incorporating the same features as the W180.
Between 2006 and 2007 market share tumbled spectacularly to 13.1 per cent, and has continued to get worse on an annual basis. In 2008, Motorola had dropped to just 8.7, and to a mere 4.8 per cent a year later. By 2010, it had fallen to 2.4 per cent, hitting 2.1 per cent in 2011, two per cent at the start of 2012 and around one per cent today.
Losing touch with customers
Rider accused the firm of “arrogance”, something that transpired down to the reseller channel, which turned against the one-time giant.
“Motorola got very complacent and arrogant,” he said. “Let’s be blunt, fundamentally most phones are the same, specification-wise. So it comes down to what the sales people recommend. In our stores we sell lots of Sony because Sony has really engaged with our staff, for example.
“Motorola forgot all about that way, and Nokia has forgotten that in recent years. If you look at 2007, Nokia was at the top but they switched off and they will be the first to admit they disengaged with the people who are doing the work. BlackBerry did the same thing.
“Motorola haven’t really been a force to matter in the industry in the UK since the StarTAC, and that was from the early part of this century.
“Nokia used to spend 10 per cent of its profits on research and development – so it overtook Motorola based on the sheer quality of its products.”
Analysts Mobile News spoke to believe one of the major downfalls was the delay in switching from feature phones to smartphones, as well as adopting touchscreen technology.
Figures show that at the end of 2007, by which time the iPhone had been rolled out, Motorola shipped 160 million handsets, out of which only 1.8 million were smartphones. Two years later in 2009, Motorola shipped a total of 55 million handsets, of which only two million were smartphones.
Failure to make the switch, according to Analysys Mason lead analyst for mobile content and applications and mobile broadband and devices Ronan de Renesse (pictured right), was its biggest mistake.
Failed to adapt
“At that point that was it for Motorola – because how do you recover from that?” Renesse said. “With Apple and Samsung getting more ground, Motorola failed to adapt and to be an innovator in the smartphone space.
“It failed to address competition from Nokia and Sony in two key ways. Firstly, they were too slow to go to touchscreen. Secondly, it took them time to move to the Android platform and really invest in it.”
Informa research analyst Julian Jest says Motorola failed to match its successes in hardware by developing consumer-friendly and appealing software for smartphones.
“In short, it should have put much more effort into building apps, or at least ensuring partnerships with companies that were already doing so. The secret of Motorola’s early successes was all in hardware, in terms of bringing innovative features to the phones; getting the size of their phones right,” Jest said.
“In the transition to smartphones, successful manufacturers placed less importance on hardware and more on software and applications, something which Motorola did not do. Once smartphones came along, the clam-shell design that Motorola was so keen on quickly died off.”
Full article in Mobile News issue 568 (July 14, 2014).
To subscribe to Mobile News click here