Motorola?s road to oblivion

Motorola

Two years ago, comScore pegged Motorola?s share of United States smartphome subscribers as 17%, down 1.8 percentage points in three months. That slide has pretty much continued ever since and yesterday?s survey found Motorola?s share dropping another 0.8 percentage points to 10.4%. It may seem that LG (066570) has suffered a wipe-out in the U.S. market over the past years, but LG?s share has actually slid just 3.4 points since November 2010. Motorola?s share has crashed by 6.6 points.

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It?s not hard to pinpoint the two main reasons for the plunge, and the biggest problem is AT&T (T). Two years ago, Motorola still had fairly ambitious product launches for AT&T. In January 2011, Motorola announced the Atrix with great fanfare, apparently seeking to court AT&T seriously with a whole new product range. The Atrix launch was delayed several times and the would-be flagship suffered from major quality problems.

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After the traumatic summer of 2011, AT&T?s attitude towards Motorola chilled.?Today, there isn?t a single Motorola model in the Amazon (AMZN) wireless top 20 list of most popular AT&T phones. This is the chart where Motorola used to reliably hold one top 3 and maybe two top 10 slots. Now brands like Pantech and Sony (SNE) Xperia outperform it.

The second problem for Motorola is Sprint (S), where the situation mirrors closely the grand AT&T fiasco of 2011-2012. A series of deeply disappointing launches have lead to operator disenchantment and dismal current sales.

The industry consensus even before Google?s (GOOG) acquisition of Motorola was that the company simply did not have talent pool deep enough to develop separate product ranges for Verizon (VZ), AT&T and Sprint. Motorola?s strategy for prioritizing Verizon exclusives yielded some monster hits in the DROID series. But at the same time, it starved AT&T and Sprint. It is now clear that Motorola should have adopted the tactic used by Apple (AAPL) and Samsung (005930) of creating annual blockbusters that are sold to every operator with minor modifications. Attempting to tailor half a dozen different models for each year worked a decade ago, but has now turned into Motorola?s bane.

Interviews of three Motorola engineers who have recently left the company reflect the oldest clich? in the phone business. A takeover or a merger leads to a new wave of executives arriving at a handset manufacturer, pushing out experienced people and disrupting product development without bringing in skills that would actually speed up R&D. The arrogance of Google people towards Motorola probably matches closely the way Philips treated Lucent?s mobile phone unit and BenQ handled the Siemens team.

In all three cases, the deterioration of an already fading handset vendor was accelerated by disruption of key development projects. Putting together a team that can actually get a phone out of a lab and into production requires a collection of experienced professionals that is very hard to compile. Antenna and baseband processor technologies may be now so mature that companies can just buy modules they simply slot in. But display technology and UI software are currently evolving so rapidly that trying to keep up with Samsung and Apple is just as hard as trying to match Nokia?s (NOK) antenna and miniaturization wizardry back in 1997.

Google is now probably trying to mimic Apple and transition Motorola into the ?one miracle phone a year? model. It will try to get back to AT&T?s and Sprint?s graces at the same time that Nokia is spending big to push Lumia, RIM (RIMM) is fighting for survival with its new BlackBerry 10 range and HTC (2498) attempts a come-back. This is one crowded field considering that Apple continues its relentless US market share expansion. Two years ago, Apple was not in the comScore list of five leading phone brands at all. In November 2012, it had hogged 18.5% market share. Google is facing an enormous challenge if it truly wants to revive Motorola. This acquisition has the potential of turning into a gargantuan money pit.

This article was originally published by BGR

Source: http://news.yahoo.com/motorola-road-oblivion-154044799.html

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