ROSEMONT, Ill.-The answer to industry’s and investors’ lingering question-what the heck is Motorola Inc. going to do to follow up its monster handset hit, the Razr?-came last week in this Chicago suburb as the company unveiled new phones and boasted about its operations and strategy to analysts and media.
The answer to the lingering question on new handsets: more Razr. Though this response initially sounded disconcerting when Ed Zander, Motorola’s chairman and chief executive officer, offered it up in an earnings-related conference call earlier this month, the full picture unveiled last week made more sense and appeared to please analysts.
For the record, Motorola unveiled its new, signature clamshell-style model dubbed the Krzr, a slider-style phone dubbed the Rizr, as well as new editions of the Razr and Slvr. An entry-level, ultra-thin candybar model dubbed MotoFone will be the company’s new, showcase product in emerging markets, critical to its efforts to combat arch-rival Nokia Corp.’s market lead. Further, Motorola has seized upon colors, finishes and innovative casings to appeal to as many demographic groups and untapped markets as possible, building on the revelation that its pink Razr appealed to a gazillion women. Two examples: a customer-designed “tattoo” can be etched into the casing of certain models, presumably to please the youth market and, the company has discovered, a peculiar shade of green casing is pleasing to South Koreans.
The exuberant language of Motorola’s executives revealed much. There was much talk of “wickedly cool devices”-a phrase that, coming from the mouths of middle-aged executives, managed to sound both ludicrous and encouraging at the same time. Motorola executives appear to not only “get it,” but to be capable of wrestling it to the ground for fun and profit. Remarks about the company’s achievement in selling 50 million Razrs soon extended to banter about the challenge of selling 500 million phones, then to giddy joking about 5 billion, one for each person on Earth reputed to have never made a phone call. The mesmerizing numbers served merely to underscore Motorola’s new “the sky is the limit” bravado.
Motorola did not announce destination markets, carrier relationships or pricing for its new phones, but said they would be available in the third quarter. That would position the company with a reinvigorated portfolio for a holiday-related retail splash in the fourth quarter, typically the strongest of the year.
The company clearly places importance on having a robust and deep portfolio to compete in any market at any price point to feed its bread-winning mobile devices business, and plans to grow its newly merged networks and enterprise business and its connected home business partly through handset innovation.
Beyond revenue and profit, however, company executives also sought to impress the financial markets with their products, operations and strategy to boost Motorola’s stock value. They believe it has been undervalued for more than a year as Razr’s meteoric sales climb became widely recognized and the “what next?” question took hold of investors’ psyche. They carefully laid out their plans in terms that took into account Motorola’s recent momentum, while subtly and not-so-subtly digging at competitors’ perceived weaknesses.
In a sense, the company has decided to innovate by tweaking an iconic design, which makes sense from both a style and name perspective-why waste retail-level product recognition while “Razr” still reverberates in customers’ minds?-as well as a manufacturing efficiency angle, the latter critical for a global company that churns out nearly a million handsets per business day. Phone platforms, such as the ones underlying Motorola’s existing Razr, Slvr, Rokr and Pebl families, form the basis for the rapid and economical development of new models that can meet shifting market conditions.
Motorola’s analysts’ meeting has become the company’s chosen forum for presenting new products and, this year, came on the heels of an impressive quarterly earnings report that clearly lent credence to executives’ explanations of their operations, strategy and product roadmap. The company’s relatively new strategy is to announce new products only when they are about to launch, to throw competitors off-guard, stymie would-be style followers, copycats and cloners.
The Krzr model-much-discussed on Web sites as the “Canary,”-Motorola’s internal nickname-is a quad-band GSM phone compatible with EDGE networks, slightly less wide than the Razr, with a 2 megapixel camera, video and music capabilities, stereo Bluetooth connectivity and a microSD memory card slot. One differentiator is the attention paid to the casing: it is made of magnesium, polished chrome and hardened glass. The Krzr K1m is a dual-band CDMA phone with EV-DO compatibility and external music player controls. The quad-band GSM Rizr model offers a complement of camera, video and music capabilities in a slider form factor. The Razr XX and Razr MAXX are the company’s new HSDPA handsets.
Motorola also showed it was listening to market reactions to its offerings when executives said that an upgraded Moto Q smart phone would be forthcoming; analysts had said the company cut corners to enable it to offer the handset at the disruptive price of $200. The Q is garnering strong consumer interest compared to its Palm Inc. Treo series competition, according to Compete Inc., which specializes in measuring online consumer interest in the United States. This was true despite the Q’s availability only at Verizon Wireless, while the Treo is available via Verizon Wireless, Sprint Nextel Corp. and Cingular Wireless L.L.C.
