I feel a little rant coming on… the New York Times is reporting on Motorola’s (NYSE: MOT) fairly dismal earnings results (our coverage here) and apparently has learnt nothing from the history of the mobile industry. The article begins: “In Hollywood, it does not take long for the pundits to start grumbling when a studio has a string of flops. Nowadays, things are no different for the cellphone business, which, like the film industry, is a hit-driven pursuit.” It was exactly this thinking that got Motorola into trouble in the first place, because the mobile handset business is not hit-driven. Motorola had a mega-hit with the Razr but that was a one-off aberration, like the Crazy Frog. It made a lot of money for a brief period of time but you cannot build a business model off it — in fact, the mobile handset business is a lot like the ringtone business because it’s personal: Everyone wants something different and the secret to success is to offer as many different flavors as you can. Nokia (NYSE: NOK) had sold about 4 million of its “hit” phone, the N95, by the end of the third quarter last year, so you can add a couple of million to that to the end of 2007 if you want to…but compare that to the 437 million handsets Nokia sold in 2007, or even to the 60.5 million “converged devices” it sold in 2007, or even to the 38 million Nseries handsets. You can do the same with LG (SEO: 066570) and Sony (NYSE: SNE) Ericsson (NSDQ: ERIC) and get the same results — they are driven by a wide variety of handsets, not by hits. Luckily for Motorola shareholders CEO Greg Brown seems to understand this…
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