Motorola is facing its toughest ever year in the intensely competitive mobile phone market and is likely to end 2009 in a vastly different form as it moves to improve its poor financial performance and brand perception.
Some even believe it will not survive the coming year.
Compounding the effects of the economic downturn (which cooled many customers’ plans to upgrade or replace their mobile phones in 2008) was the chilly reception received by many of Motorola’s new products, including key revamps of its previously successful RAZR device. Other devices launched in 2008 also failed to spark interest, leading to falls in revenues and profits.
On top of that were problems at the managerial level, despite the seeming coup of poaching Sanjay Jha from Qualcomm to head up the mobile devices business (part of a broader plan to spin-off the business and turn its fortunes around with alacrity). Mr Jha may be regretting his move as Motorola has deferred plans to proceed with the spin-off, effectively preventing him from restructuring the unit as quickly as he would like.
Events may now be overtaking Motorola as it struggles to return to growth. It’s now being rumoured that the handset business, which was sorely under-represented at the recent Consumer Electronics Show in Las Vegas, will imminently announce a headcount reduction of 50%, decide to launch fewer products in order to control costs and improve focus, and reduce its reliance on certain operating systems in favour of a single platform – most likely newcomer Android. This has yet to be confirmed by the company, especially the Android-only commitment, but it is widely agreed that Motorola needs a completely new strategic direction if it is to survive.
Motorola seemingly is pinning all of its hopes of recovery on the small – but growing – Smartphone market. But it will face intense competition from Nokia, RIM, Apple, LGE, Samsung, HTC and others.
Indeed, this approach may yield only narrow opportunities for growth for the business.
Can a slimmed-down Motorola mobile handsets business (or whatever it may be called if it succeeds in separating from its parent) survive for long? Time will tell, but 2009 will certainly prove to be a make or break year, either way…
Tags: Android, Apple, CEC, Consumer Electronics Show, economic downturn, handset, High Tech Computer, HTC, LG Electronics, LGE, mobile, mobile device, mobile phone, mobile phone market, Motorola, Nokia, Qualcomm, RAZR, RIM, Samsung, smart phone, smartphone, spin off
