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Summary:

After riding Android and Verizon to help fuel its comeback, Motorola Mobility is sounding a cautious tone about its reliance on Verizon in the wake of slowing sales. Motorola sales on Verizon Wireless accounted for 28 percent of Motorola’s sales last year.

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After riding Android and Verizon to help fuel its comeback, Motorola Mobility is sounding a cautious tone about its reliance on Verizon in the wake of slowing sales. According to Bloomberg, Motorola Mobility said in a regulatory filing late last week that Verizon accounted for 28 percent of sales, up from 13 percent in 2008. The partnership is a concern now that the iPhone 4 has launched on Verizon, causing what appeared to be some weakness in Android smartphone shipments, the company reported last month.

“The loss of, or a significant reduction in revenue from, one or more of these customers could have a negative impact on our business,” Motorola said in the filing.

Motorola CEO Sanjay Jha admitted last month in an earnings call that the Verizon iPhone was apparently prompting a little slow down in sales on Verizon for Motorola ahead of its launch. This is a concern we’ve raised in the past for Motorola. The company has put its chips on Android and, to a lesser extent, Verizon, which is the leading carrier for Android. The question for Motorola is whether Android will prove to be a long-term engine for growth, especially as the iPhone grows beyond AT&T.

To be sure, Android and Verizon have still been a blessing for Motorola. And the company looks to be positioning itself to go after the enterprise Android market with the recent purchase of 3LM, so its exposure to waning consumer sales could be minimized. But Motorola still has a ways to go to prove it can leverage Android for long-term success, something it seems to realize more and more. With the smartphone game increasingly coming down to scale, favoring large vertical companies like Apple and Samsung, it’s going to put even more pressure on Motorola to figure out how to make Android and its carrier partnerships pay off.

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  1. Well then Moto needs to put their money where their mouth is and sell all their Android handsets SIM unlocked, direct to consumers, without any carrier entanglements, on motorola.com

    …what’s that you say? Oh they aren’t *THAT* worried?

    I thought so.

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    1. Verizon (CDMA) phones don’t have SIMs – They are individually tied to carriers aren’t they?

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      1. You are correct, the Verizon phones don’t have SIMs. Which is why Todd is right, Moto should move beyond the carrier subsidized model and let people who like their phones but not Verizon (Droid) or ATT (Atrix) buy them. While people made fun of Google for their Nexus One attempt to unbundle phones and contracts, consumers would be better off if they did that. And so might Motorola. For now, they will be tools of the carriers. It only makes sense for a device manufacturer to lock their phone to one carrier if their phone isn’t that good (or they get an incredible revenue sharing deal like Apple did with ATT, and even that ended). If you have a great product, you don’t need the carrier to sell it. Especially when they have other options.

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      2. I think you’re wrong in that last respect – People in the U.S. expect that subsidy no matter the quality of the phone.

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  2. Obvious move, as long as these companies keep the price of handsets so high, this is their dilemma. Sell the phones at a decent price and put the carriers in their place.

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  3. I don’t know about the Android part, but they are definitely too reliant on Verizon. Motorola Android phones have a pretty weak presence globally. Samsung sold its Galaxy S in 130 countries as well as on 5 carriers in USA, and they’ve had tremendous success with the Galaxy S model. Motorola should try doing the same.

    Also, Motorola really needs to embrace the “hacker community” a lot more. Early adopters, who may be few, but have strong voices and influence far greater than their numbers, will dictate which Android phones are the best to buy, and since Motorola keeps locking down the bootloader so they can’t put custom ROM’s on it, the hackers and early adopters prefer to use HTC or Samsung phones and promote them to their friends and families.

    Look at Microsoft, even they realized that being friendly with the hackers creates huge momentum for their Kinect product, and without them doing all the cool stuff on it, they probably wouldn’t have sold even half of what they sold so far. That’s why they are now creating a hacker friendly development kit.

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    1. Hackers had nothing to do with the success of Kinect – They (hackers) are only now (after success) being embraced a little by Microsoft.

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  4. No more Motorola for me… I’m choosing a non-locked bootloader. I enjoyed my X, but in the end, it doesn’t do 100% of what I want it to.

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    1. Same here with choosing unlocked bootloaders, still waiting to see how well latest dual core phones will compare. LG, Motorola and Samsung contenders so far all have strong and weak sides. Atrix looks good but part of it having locked bootloader make me wish to find unlocked alternative.

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