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Summary:

Motorola today said it sold 8.3 million handsets in the second quarter, earning the Mobile Devices division $1.7 billion in sales and returning the unit to profitability after a string of quarterly losses. What’s the biggest catalyst for such a change? In a word: Android.

Motorola announced today it sold 8.3 million handsets in the second quarter, earning the Mobile Devices division $1.7 billion in sales, and returning the unit to profitability after several quarters of losses. Over 2.7 million smartphones were part of Motorola’s overall handset sales, showing the vast growth in this segment, as the company reported zero smartphone sales in the same quarter in 2009. Although Motorola quarterly results don’t specifically name the biggest catalyst for such a change, it can be summarized in one word: Android.

Starting with the original Droid in November, and more recently with the Droid X (see our review here), Motorola’s adoption of Google’s smartphone platform is the primary contributor to Motorola’s continued turnaround. Motorola can’t rest on its laurels, however, else it risks repeating its RAZR complacency. For now, though, Droid is a winning play. The initial Droid sold an estimated million units in its first 74 days of availability and the Droid X quickly sold out. Motorola can thank Verizon as well as Google, because the largest U.S. carrier has backed Motorola’s Droid handsets with marketing dollars to help raise consumer awareness. It’s a win-win since data-hungry Droids are growing Verizon’s revenues.

Although Motorola’s smartphone share doesn’t yet rival that of iOS4 or BlackBerry, I’d think that today’s Motorola news would concern both Apple and Research In Motion, but for different reasons. Apple’s iPhone sales momentum appears to be slowing — it sold roughly the same amount of iPhones over the two most recent quarters — while less than a year after Android adoption, Motorola now sells nearly one Droid Android handset for every Apple iPhone sold.  RIM, on the other hand, still has no answer to more modern platforms like Android or iOS4. That’s expected to change next week when the company will likely launch or share additional details on its new BlackBerry OS 6 platform at a RIM press event. What RIM launches could dictate if it will stay the top smartphone seller in the U.S., or if Motorola’s Android bet will change that over the long haul.

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To Win In the Mobile Market, Focus On Consumers

  1. “Motorola now sells one Droid for every Apple iPhone sold”?
    That’s a misquote, right? Apple sold 8.4MM iPhone units in its latest quarter, whereas Motorola sold 2.7MM smartphones, and that includes phones like backflip which are not “Droid”

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    1. Bayjinger, I’ll have to dig around and see if I can get a breakout of sales by device – although I doubt it. You’re 100% correct that Motorola doesn’t just sell Android devices under the Droid monniker – the BackFlip and Cliq are great examples. But the bulk of Motorola’s sales are Droid as the non-Droid devices aren’t setting any sales records for the company. I may have to qualify my statement by saying that “Motorola now nearly sells one Android handset for every Apple iPhone sold.” Thanks for reminding me of the non-Droid devices!

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  2. Kevin – keep in mind that, while they aren’t setting any sales records, the non-smartphones in Motorola’s lineup still represent a significant number of device sales.

    I would argue that it’s not so much Mot’s numbers that should/would concern the folks in Cupertino as it is the overall Android numbers. Mot (and HTC and Samsung and others etc) aren’t the sales drivers outside of how big a check they cut to Verizon (and others) for marketing them as a “Droid” or going out on their own (in the case of Samsung) to market their Android product.

    I think you are spot-on with the RIM commentary however. The growth of Android and iOS and their respective encroachment on the Enterprise turf that RIM has held for so long HAS to worry folks in Waterloo

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    1. Sean, I agree = as stated in the opening sentence, Motorola sold 8.3 million handsets, or roughly as many as Apple. Of those, 2.7 were smartphones, so a significant share of sales is in the feature phone segment, as you say. I’m willing to bet that half of the device sales are smartphones by the end of the year, however – Moto’s ASP of a handset increased because they’re selling more smartphones, which is where the profits are. We’ll see in 6 months. :)

      Good points, too, on Android and iOS4 in the enterprise. I’m looking forward to seeing how RIM responds next week.

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      1. As usual Kevin has no idea what he is talking about when it comes to mobile devices.

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      2. As usual, people make unfounded accusations by jumping on an inadvertent slip. Pity that the cycle isn’t broken by now.

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      3. Just wanted to toss in here that I love all your Android articles, it’s the biggest reason I check GigaOM frequently.

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      4. I appreciate that, Daniel. Glad to have you here! :)

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  3. iPhone sales are not slowing. They are restricted by being available on one carrier whereas Android is on multiple carriers. So comparing numbers of Android phones sold vs iPhone is meaningless. Thats really obvious.

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    1. “iPhone sales are not slowing.”

      Apple’s reported iPhone sales in Q3 of 2009: 5.2m
      Apple’s reported iPhone sales in Q4 of 2009: 7.4m
      Apple’s reported iPhone sales in Q1 of 2010: 8.737m
      Apple’s reported iPhone sales in Q2 of 2010: 8.752m

      Rate of change is declining = iPhone sales are slowing.

      “They are restricted by being available on one carrier whereas Android is on multiple carriers.”

      Apple iPhones are sold around the world in numerous countries and carriers, just like Android phones. That’s really obvious. ;)

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    2. Oh, and if you’re going to leave the above comment about me not having any idea about mobile devices, at least have the decency to do it under your own name when using the same IP address, ‘k? Thx!

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    3. The problem with these quarterly iphone sales that depict a decline is that do not account for a slow down in iphone3 sales due to the emminant release of iphone4. When the newest sales statistics for iphone4 are relesed, I’m sure it will paint a very different picture.

      And when the exclusive agreement with AT&T expires, your going to see an explosion of North American iphone sales.

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    4. The problem with the quarterly iphone sales figures that depict a decline, is that do not account for a slow down in iphone3 sales due to the eminent release of iphone4. When the newest sales statistics for the iphone4 are released, I’m sure it will paint a very different picture.

      And when the exclusive agreement with AT&T expires, your going to see an explosion of North American iphone sales.

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    5. The problem with the quarterly iphone sales figures that depict a decline, is that do not account for a slow down in iphone3 sales due to the eminent release of iphone4.
      When the newest sales statistics for the iphone4 are released, I’m sure it will paint a very different picture.

      And when the exclusive agreement with AT&T expires, your going to see an explosion of North American iphone sales.

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  4. I really don’t think Cupertino has anything to worry about as long as they keep breaking total sales and profit records quarter after quarter. After all when you are the biggest tech company in the world you are really only competing against yourself. Who cares if Android has bigger overall numbers spread across many more devices and companies. Apple is still number one overall as a company and the gap is growing between them and other tech companies (i.e. The Google). With highly probable entry into new markets next year (CDMA,LTE,New Telcom Carriers,New Countries,etc) the iPhone and iOS4 is still sitting pretty in my book. I think this Holiday season will be huge for Apple and iOS4 in particular so no worries. :-)

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  5. Cumulo Nimbus Thursday, July 29, 2010

    I think Apple shouldn’t get caught up in a numbers game with Android. They just need to stay focused on making the BEST product in each category they sell in. If they just wanted total sales numbers they would open up a lot of new sales fronts (like more iPhone models, multiple iPad editions, more Notebook models, etc) but that is not what they are doing. Almost every product they make is still rated the best in its category (Magic Mouse, Monitors excluded) and that is where they need to stay focused. I would ignore the growing Android numbers because in the end their is going to be a lot of crappy Android stuff out there too as well as some very good Android super phones. So you can skew numbers to support almost any argument and as long as Apple continues to make a healthy profit it will give them the opportunity to make more exciting new stuff that many many people will want.
    As far as Android as a whole is concerned I believe as its sales numbers grow a greater and greater percentage of Android sales will be to low-end of the mobile market which Apple has no desire to enter.

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  6. in my opinions, apple will not sustain the same margins on iphone for long time, so either they need to come with new iphone every year with new specs, or increase the market share to keep same profit levels.
    iphone like form factor have limitations, they might change some size, height,weight else they need to depend of hype. the only thing which can will give boost to apple profit is their media management in every sense, loyal fans.
    Once the status symbol for iPhone will be gone ( i mean you will see iphone with many users, status will be gone), its difficult for apple.

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  7. [...] operating systems. But the uptake of Android among handset-makers is another factor in such growth. Motorola’s Mobile Device division has swung from losses to profits on the back of Android, for example. And HTC — once primarily a Windows Mobile phone maker — embraced Android [...]

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  8. [...] dollars helped make Droid become a top seller for Verizon and gave Motorola a needed boost, starting the handset-maker’s return to profitability, while Google ended up killing the Nexus One direct sales [...]

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  9. [...] different from that of HTC or Motorola. Android has been good for both: HTC profits are up and Motorola’s mobile division is making money again. The latter two offer various makes and models of Android smartphones at nearly every price point. [...]

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  10. [...] no company in the smartphone space have yet proven they can return to success after falling behind. The lone exception is Motorola, which embraced Android: something I’ve suggested Nokia [...]

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