There was a wisp of hope but no surprises and no sense of when Motorola’s beleaguered mobile phone unit might finally recover as the company’s executives met with financial analysts here Friday.
In the past Schaumburg-based Motorola Inc. has used its annual gathering for financial analysts as a flashy launch point for key new phones. Not this year. But then, most analysts weren’t expecting anything new, as Motorola’s phone operation this year has gone from being a bold, financially sound innovator to a money loser with, critics say, a relatively lackluster product lineup.
Stu Reed, Motorola’s new mobile phone chief, set out to dispel the latter notion. “Believe me, we still know hot and sexy. Innovation is alive and well at Motorola.” He pledged that Motorola will consistently come out with compelling new phones. “You’re going to be hit by a wave, a drumbeat, a cadence of new products. … It’s not about a one-hit wonder. It’s about waves and waves of good products.”
The one-hit wonder reference seemed to be a reference to Razr, the revolutionary Motorola phone introduced in November 2004 that remains a huge seller today. While Razr began its life as a premium product, it had become a commodity by the latter part of 2006. And Motorola’s attempts to follow up the Razr — particularly the Krzr — didn’t work.
“We will not ride one horse to the bitter end again,” Reed said in his first major public forum as head of Motorola’s phone operation.
Reed hinted that a hot new model is due out soon: a “best in design, best in class phone, coming in October,” as he put it. But he declined to be any more specific. Nor would Reed offer any specifics when asked by an analyst when the mobile phone business is expected to be healed: “I’m not giving any guidance.”
Motorola is hoping the recovery will begin with a few new models it released this summer, including the Z8, a souped-up version of the Rizr, a phone originally announced last year. The Z8, which is available in Europe, features advanced music and video capabilities. “The sell-through on this product is phenomenal,” Reed said.
In the U.S., Motorola is pinning its hopes on the Razr 2, a technologically advanced phone with Razr-like styling that debuted last month. “The sell-through on the Razr 2 is above average to superior,” Reed said.
Reed showed off the TV commercial for Razr 2 in which a svelte couple slash each other’s clothes with their phones. The ad campaign is meant to “get the pizazz back in the Motorola brand,” Motorola Chief Executive Edward Zander said.
The Razr 2 commercial was the only flashy video at this year’s meeting, another departure from Motorola’s past two analysts meetings, which were filled with a cavalcade of visuals set to thunderous music.
Since its last such meeting, Motorola, along with losing money and momentum, has also lost a lot of market share. The world’s second biggest cell phone-maker became No. 3 during the second quarter, slipping behind Samsung in global market share.
In a strategic shift this year, Zander de-emphasized market share as a goal if it comes at the expense of profit. He and Reed stayed hard on that message Friday, with Zander saying the company won’t chase low-end business in developing markets, a business dominated by Nokia, the world’s biggest cell phone-maker.
One analyst, though, asked whether Motorola could sustain long-term profitability without building market share.
Zander acknowledged the importance of volume, “but we’re not going to play in some spaces,” he said in response. Earlier in the meeting, Zander said, “People ask, ‘What are you going to do about the $20 phone?’ Nothing. We’re not going to go there.”
Motorola hasn’t just lost market share on the low end though. For instance, its position in Europe, a bastion of tech-savvy phone users, has been severely eroded this year. But Greg Brown, Motorola’s chief operating officer, said that should improve.
“We expect to gain share in Europe and Asia where, quite frankly, we have gotten punished.”
Brown is also new to his job, promoted this year from his post as head of Motorola’s public radio and wireless equipment business.
Brown stressed the importance of new leadership in several areas of the company and noted that the mobile phone division has particularly seen change: 50 percent of its senior executive team is new.
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mhughlett@tribune.com
