Motorola has revealed ambitious plans to focus more on high-end mobile devices, such as smartphones, to rescue its ailing mobile handset business. Its strategy – if such it is – is to ‘develop innovative new products’, particularly high-end devices using the new Android operating system (OS).
Although the company will continue to support the Windows Mobile OS, news that it has cut the number of developers working on the platform suggest to me that it will be reserving its energies and budget on creating Android-based devices (expected by Q409, it says), while restricting Windows Mobile to stop-gap devices that will maintain the visibility of its brand in the rest of the year. This is my guess, by the way!
It’s a risky strategy, particularly as long-time Motorola customers are deserting the company for the likes of the iPhone, the Blackberry Bold and Storm, and even the G1 handset. Going without a major product launch for much of the year could prove fatal.
Also, developing a new user interface, applications, and software-based services to run over the new phones and OS will be a costly exercise. So, Motorola knows it had better get it right first time or risk falling out of the market.
Just 19.2 million new Motorola handsets were sold in Q408, down from 25.4 million in Q308 and 40.9 million in Q407. Over this time, the company’s market share has plummetted from 12.4% to 6.5%. Ouch!
The long-awaited separation of the handsets unit has, therefore, been put on the back-burner and certainly won’t happen this year. If it does, much will depend on progress made during 2009 and whether the unit emerges in 2010 as a leaner, fitter business. If so, Motorola will have a number of positive options to consider (spin-off to shareholders, sale to a third party, public share offering).
But in the meantime, it risks being exposed to greater financial difficulties and the potential that many of its rivals will be putting new devices on the market that it cannot compete with (Nokia N97, possible new Android handsets from T-Mobile/HTC, the new Palm handset, a possible new offering from Apple). Also, there’s the prospect of added competition from the likes of Acer, Dell and even Microsoft…
That’s a big gamble, even for a well-known brand like Motorola. Still, with Juniper Research expecting annual smartphone sales to rise from 158 million in 2008 to over 300 million by 2013, it’s a gamble that might just pay off.
Tags: Acer, Android, Apple, BlackBerry, Bold, Dell, G1, HTC, iPhone, juniper research, market share, Microsoft, mobile, mobile device, mobile handset, mobile phone, Motorola, Nokia, operatng system, OS, Palm, Research In Motion, RIM, smartphones, Storm, T-Mobile USA
