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Here's Why Motorola Bet on Android

37875The estimate that Verizon (s vz) sold 100,000 Droid phones this weekend as part of the Droid onslaught is pretty sweet for Motorola, as is the assumption from Mark McKechnie with Broadpoint AmTech that the cellular provider purchased 200,000 of the handsets from Motorola (s mot) in anticipation of high demand. But the more interesting part of his research note wasn’t the past — it’s the future, namely that he thinks Motorola’s handset business should return to an operating profit next year on the strength of co-CEO’ Sanjay’s Jha’s bet on the Android operating system. From the analyst note:

We estimate each Android unit contributes 4x the gross profit of a feature phone unit and that 10 million Android units will contribute nearly half of the gross profits in MOT’s handset division.

And that profit boost is why Jha is betting on Android — and why the bet must succeed. Motorola doesn’t have any more aces, and consolidation is a real threat for the handset industry. After watching Apple’s (s aapl) iPhone and devices from Research In Motion (s rimm) steal profits from the handset industry, Jha hopes Android offers the winning hand that Motorola needs in order to take some of those profits back.

11 Responses to “Here's Why Motorola Bet on Android”

  1. Went to the Verizon store, played with it, did not like it at all. I’m don’t own an iPhone or smart phone for that matter, but out of all the ones I’ve tested this is the least preferred.
    It is well built but the keyboard is cumbersome.

    Good luck Moto.

  2. if moto can leverage their blur concept into an investor platform e.g. stocks, bonds, news, trade execution, etc, i’d pick it up in a heartbeat. might even add moto in my portfolio, who knows.

  3. Motorola has always been a personally frustrating company. They have always been offered so much opportunity only to squander it down the road. Great cell phones, without any idea that something like the iPod might be successful. Currently, we are witnessing the evolution of mobile technologies past the computing paradigm of laptops, desktops and workstations, and Motorola needs a more cohesive idea of what can and will be accomplished in the mobile space.

    I mentioned that much of education requires something along the lines of a tablet iPhone, but cheaper. The response wasn’t what I expected. Android and mobility is a replacement of desktop models, and the phone is only the first step. While we have not seen much success in the MID market, that does not really describe the rest of this market which includes many verticals. Education is one, but there are so many others.

    Android is an embedded play. It is the creation of the client for the cloud server market. It is important that other models are pushed forward. Motorola can and should get a following in this space, but some vision is necessary. Blur is interesting, and is the perfect model for exploring the symbiosis between the device and wider services. They need to sustain these efforts and expand them… fast.

  4. Jha’s bet seems likely to pay off. How nice to have a credible smartphone with the fat margins but minus the royalties associated with a non-free platform. Android is clearly a winner and Droid is built like a tank and has the look and feel of an aspirational device.