18 Comments

Summary:

Worldwide handset shipments are up 13.8 percent in the first quarter of 2010 compared to the same period last year, but the rising tide isn’t helping Motorola — sales were down 42.2 percent from the year ago quarter. Is Motorola counting too much on its Droid?

Worldwide handset shipments rose 13.8 percent in the first quarter of 2010 over the same period a year ago, but the rising tide isn’t lifting all boats, according to the most recent iSuppli report, titled “Mobile Handset Industry Foresees End of the Recession.” Motorola continues to leak market share, dropping to the eighth spot from sixth in the span of 12 months — the handset maker sold 8.5 million phones during the first quarter of 2010 vs. 14.7 million in the comparable three months of 2009, a decline of 42.2 percent. Research In Motion, Apple and ZTE all leapt past Motorola in terms of sales in the most recent quarter.

Sales in thousands. Source: iSuppli

The data reflects all types of handsets, but the numbers show the growing importance of the smartphone, sales of which is expected to surpass feature phones in the U.S. by the end of 2011. And that trend is both hurting and helping Motorola. On the one hand, the company hit a home run with its Motorola Droid handset that debuted on Verizon’s network in October of last year, with nearly a million units sold, or 8.33 percent of all Motorola sales, according to iSuppli’s fourth-quarter 2009 data. But other recent at-bats have been singles at best. The Cliq, Backflip, and Devour aren’t selling like the Droid has, perhaps because they lack the advertising push it received.

It has to be tough for the Devour (see our video review here) to compete with the Droid on the same network — Verizon customers can purchase the Droid right now for $199 and get a second one free. Priced at $149, the Devour only saves customers $50, uses the older Google Android 1.6 software and doesn’t net you a second, free Devour, though Verizon will throw in up to three free feature phones. The Backflip faces similar challenges on AT&T’s network: it runs the much older Android 1.5 software and is priced at $99, for which a customer could grab an 8GB iPhone 3G. For Motorola to reverse momentum, it needs to find another Droid.

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  1. Kevin,
    Motorola has to consolidate few models. No point in selling the same phone in three variants. Second thing, Moto should bring some of the features of Android to the regular (Dumb phones). Seriously there is a vacuum between smart phone and a dumb phone. Remember those rumors about iPod Nano phone from Apple?
    Moto needs to do such thing using Android. It should be a “sleek” phone with camera and keypad/wheel (if they can) , with an excellent browser. They can sell millions of these. And that is the only way they can gain market share. They cannot gain market share with smartphone alone.

    1. Kevin C. Tofel gbp Monday, May 17, 2010

      You might be onto something there, but the lower-priced Cliq and Backflip appear to be the way Motorola is attempting to bridge the gap between feature phones and smartphones. The other strategy is to compete in the market by differentiation with Motoblur — not sure that’s going to pan out well.

      1. Kevin,
        Sure Moto wants to bridge the gap. However for a mainstream consumer, there is no difference between the Cliq, Backflip and the Samsung Moment,Droid,Xperia….. the list goes on. When Apple launched iPhone, can you find an “all touch phone” in the world ? Nope. Its unique in many ways. Same logic here. There is no phone that looks like a iPod Nano. Its about time Moto or any other manufacture make feature phones based on the iPod Nano form factor.

    2. It would have been a good idea to bring a mid-market Android OS phone had it not been for the reason that in US operators want to charge for data the same $30 per month. Also, the one time price difference to consumers between top end phone and mid-market phone is very little and over the life of the 2 year contract it makes little difference.

      So, Motorola in essence has to get operators to support different data plans for their mid-market phones and it has very little leverage to do that.

  2. Articole de citit la inceput de saptamana | Dan Virtopeanu Monday, May 17, 2010

    [...] Vânzările de telefoane mobile au crescut cu 13,8% în primul trimestru, RIM (Blackberry) intră în topul 5 mondial al producătorilor conform iSuppli [...]

  3. Ok kevin. you seem to not recognize that they did grow their smartphones to 2.3 million just in one full quater of sales compared to 2 million in previous quarter. Htc has been selling smartphones for over a year before motorola just showed up and they only sent out 2.6 million. Looks like Droid is doing just fine.

    Now as far as getting losing market share further. examine their A.S.P. of their devices and look at the grander picture. You cant make money on “dumbphones” the way you used to over 4 years ago. so eliminating this portion and focusing on smartphones is a good thing. In fact the company that is in most trouble is Nokia, they have no traction in smartphones and sell excess of “dumbphones” that is a dying profitable business.

    1. Kevin C. Tofel Jonny Monday, May 17, 2010

      Jonny, I haven’t said the Droid isn’t doing fine, but you seem to have missed the post title. Even with great Droid sales, the overall sales share for Motorola has decreased, hence the Droid isn’t offsetting the share loss.

      I agree with you that you can’t make money on the low end of the market any more — that’s why Motorola needs a successor to the Droid when it runs out of gas — again, the point of the post. ;)

    2. “In fact the company that is in most trouble is Nokia, they have no traction in smartphones”

      Aside from selling more of them than Apple an RIM combined you mean? A little research wouldn’t kill you.

      Anyway…

      Motorola’s problem is that they overfocused on one phenomenally successful product – the RAZR – and got left behind because they didn’t anticipate the smartphone market and how it would absorb the high end sales. In the meantime Nokia, Samsung and LG came in and stole their lunch in the featurephone market leaving them nothing much to fall back on.

      This is why companies like Nokia, Samsung, LG and even to an extent RIM do not fixate on the top tranche of the market because it’s so volatile. Instead they make sure they have good, solid product propositions for a range of markets (it’s true that people are moving to smartphones however this does not indicate they will all move to expensive smartphones).

      If you want a risky business model you can look at Apple’s – unbelievably successful when they’re on top but tomorrow’s Moto if they don’t diversify when fashions change.

  4. Motorola should do a better job at promotion Motoblur and using it as an umbrella over their whole Android line. It’s a great idea, but even their current marketing of it hasn’t given it the sexy/unique image it could earn for Motorola.

    One way: Build Motoblur as Android’s best communication client (full Exchange sync, BlackBerry-like unification of SMS/multiple email accounts/Facebook/Twitter) and sell this for $30/year on the Android Market while making a slightly better version (themes, etc.) available for free on Motorola Android phones.

    Yeah, it’s counter-intuitive, but it could establish lasting brand relationships with users of other phone brands, and highlight MOT’s software, which is best way to distinguish their products over time.

  5. @ Jonny

    Moto just showed up? You do realize they’ve been making smartphones (whither the Q) for years. They’re not exactly rookies in this game.

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