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Motorola – strategy and vision, product line for 2007

On May, 15 in New York and a day later in London Motorola held its biggest event of 2007, which brought the announcement of the key product of 2007 for all markets, the second generation of the RAZR family, that got an unpretentious name - RAZR2 (sort of RAZR squared). Apart from that, they showcased already-debuted products and unleashed some details on promotion, exact release dates, retail package contents and so on. But the announcement was not the only plot of the event – the company also attempted classifying the models they had, putting them in one line, so as to shape the concept that would seem clear to the market. It is an open secret that in Q1 2007 the second best phone maker didn’t generate any profit due to the falling margin for the classical RAZR, lack of offerings in many price-brackets. Pretty weak proposition for operators and 3G networks had also contributed to that. And throw in considerable shake-ups in the top-management that affected the company’s vision of the market and shares as well. The debut of the new RAZR range offers an opportunity to unveil new market strategy, the direction where the company is going, to analysts and partners under the cover of a the key product release. This is vitally important for Motorola these days, for its positions in Europe are not particularly strong. Though, it is not the first time when the company goes through this – the history has just taken another turn, there were times when Motorola was getting pushed out of the European market due to mediocre offerings, orientation towards old paradigms, but them launched one, two products, that fought the market shares back and kept them for one or two years to come. Just remember that up until the year 2000 they company was refusing to offer games in its phones, entertainment features etc. In fact the entertainment front was a taboo subject, since the handsets were tailored to the needs of business-users, while other audiences were simply left out on the growing market. This proved to be a mistake that took a very long while to rectify, because to change to vision of the market meant to do the same thing as the competition, which was a very tough challenge for the pioneer of mobile technologies back then. What is the talk of the town over at Motorola today, and what is its vision of the strategy for 2007/2008?

Consumer segment and focusing in 2007

Motorola’s weak spot has always been the product portfolio, consistent line-up. Remember Nokia, Samsung, Sony Ericsson - not only do they have wide ranges, but also sub-families, collections of precuts. Examples abound – Nseries from Nokia, La’Fleur, Ultra from Samsung, Walkman, CyberShot from Sony Ericsson. Clear segmentation basing on a concrete idea, requirement of the consumers and a selection of respective products set apart by pricing policy. Such approach provides for more straightforward communication with consumers and allows retailers to position phones for different segments without any substantial investing. Technically, Motorola has long had products in all categories, been giving it a go here and there, but those were stand-alone phones that were never backed up by successors, were locked in the certain price range and so on. Apparently, it is a marketing-related misstep, as even the most fetching ideas didn’t receive proper materialization and support which led all efforts to zero. I will give you a still fresh example – having unsheathed the RAZR, Motorola had immediately come up with the Blade range (L2,L6,L7), which actually hit the market one year later. Over that time span the rivals introduced own counterparts to those products (BenQ Siemens, Fly), while Samsung forged its strategy for 2006/2007 basing on the “slim” solutions. And it was the Ultra line from Samsung that became that “golden bullet”, which allowed it to keep or increase shares on most markets and build up the image of the leader in cutting-edge technologies. In other words, Samsung made better use of Motorola’s ideas and in the end became a bigger success than the author of the concept that couldn’t ensure proper implementation. A pity for Motorola, but success in never blamed, thankfully, it is next to impossible to grab a patent for “slim” solution.

In 2007/2008 the company revises its vision of the market. They fully realize the impotence of the product line, and that’s why at the first stage they are focusing on the segments where the company’s shares are substantial and the competition is weaker, thereupon they see three big audiences:

  • Everyday Communications (The price-conscious and unconnected)
    • Mass market, focused on price
    • The segment includes first time cell phone users looking for a simple phone to call and text
    • Expected to grow 15-20 percent over the next two years
    • Motorola offers the W-series & MOTOFONE for the segment
  • Multimedia experience and Messaging (Mobile consumers who combine business and pleasure, productivity and entertainment)
    • Expected to grow 30-35 percent over the next two years
    • Motorola here offers such products as the Q, ROKR range and the Z8
    • The devices provide powerful multimedia and messaging experiences – email, music, video and gaming
  • Iconic Feature Phone (Those who want stylish and feature-rich devices)
    • Expected to grow 7-11 percent over the next two years
    • The RAZR2 is a typical representative of this segment, being a fashion phone

Let’s see why the company has selected exactly these segments and what each of them is made of. Although, it is hard to stick close to the categorization Motorola has made up, as it is too cumbersome, so we will use some of our own – Entry-level segment, Multimedia and also Fashion. They match the above segments and their description, so keep that in mind.

Entry-level segment. Motorola is one of the major makers of ultra-cheap handsets; at least it was before the end of 2006. The margin earned with such devices is minimal or missing at all, but that’s a wonderful way to win a bigger market share. The same approach holds true for Nokia, yet it sets the margin at a certain level and tries not to let the average price for its phone fall down, which is already at the bottom for this company in view of the entry level proposition volume. In this regard, the message that Nokia 1100 has gone over the 100 million mark is quite interesting – the respective press-release was released the other day.

In the second half of 2006 Motorola decided in favor of return and margin rather than its market share. Right after this decision, production of the C-series became unprofitable and one by one, these handsets were getting out of the market (C113, C115 and such). Even though they haven’t forgone the entire series, these products are no longer the key offerings for the company, playing the role of the line-up fillers, albeit generating impressive sales today and possible able to keep it up in 2007.

The MotoFONE F3 is at the ground level for the entry-level solutions (retails for 50 USD), Motorola’s even cheaper phones for open markets, beyond the agreements with 3GSM association, won’t see release. At the same time the C-series and a couple of aging devices will maintain presence in the “50-100 USD” price-bracket. Nevertheless Motorola sees recognizes the mass market for itself in clamshells and candy-bars available in the “100-200 USD” price-bracket – it is the W-series. Listing typical devices that have already made their debuts, these would be W205, W208, W215, W220 W370 and W375. The key design-related aspect for these handsets is replication of the senior model, the flagship (for the today’s offerings it is the Motorola K1). In terms of technology, the company sets off to propose loads of phones armed with FM-radio, also a VGA-camera is a must (both options are available not on all handsets).

The company’s strategy is reminiscent of Nokia and Samsung for the most part, while Sony Ericsson does the same thing in the mid-range segment. With this time-proven approach Motorola has all the makings of a successful player here, the competition will come mainly from Samsung. The decisive question of the W-series success is promotion of the flagship solutions, which they rip the design cues from. If they are sought-after, then the entry-level solutions will follow.

Classification of proposition in this segment is Motorola’s first attempt in years to put this area to rights. Technology-wise all entry-level solution will run the AJAR platform by TTPcom, which was purchased by Motorola last year.

Multimedia-segment. Motorola has the music-minded ROKR trademark on this balance, yet lacks a consistent line-up of such phones. The first offspring of the family, the ROKR E1 was a replica of the Motorola E398 and apart from iTunes that has never become sought-after for mobile phones brought nothing new to the table. My bad, I forgot the dedicated music key. The ROKR E2 had all the making of a hit, a bestseller; however it ended up with no access to the key markets, specifically, the European ones, and the success was marked only in China. The model of 2007, the ROKR E6 targets at the Chinese market, rather than Europe. It would seem that the music department is about to go down in history, but promising developments have allowed the company to re-ignite this front. The first sign was Motorola Z6, which was then attached to the ROKR family. Initially the device had nothing to do with it – check out our review to find out that it didn’t have even music keys.

Review of GSM-handset Motorola Z6 >>>

Motorola Z6 is already on sale in Asia, though it is arriving in other markets only in June. At the last moment before the start of European and North American sales they achieved an agreement with Napster, so that the users will get Napster to Go, to be more precise subscription to this service, plus 5 free uploads. From now on, various promo companies might pop up here and there, but this service integration should be assessed in the same way as iTunes, as it will not become extremely popular on Motorola-branded handsets.

The ROKR range will not be forgone, up to mid September 2007, some separate devices will be released, and then market will be presented with three-four handsets that will build up the music proposition from Motorola. Innovations include such things as use of the navigation wheel instead of the four-way button, various versions of haptics and a whole more. It is interesting that by September Samsung will also make up a music range comprising similar solutions (the same wheel, headphones set, etc.). The struggle for the consumer promises to be very action-heavy. While Samsung offers a stand-alone sound amplifier in handsets which enhances the sonic experience (check out the review of the Samsung U600), Motorola relies on interface, speed, unique functions in sound processing area. Seemingly it has much potential, let us hope that the company won’t put it to waste.

The company has tipped towards Windows Media Player 11 as the basic PC software, support for full-speed USB 2.0 support is also expected (as it was done in the Motorola E6). The battery life will go up owing to increase in the battery capacity, on average the ROKR second generation will provide 13-14 hours of music playback. The player’s interface will be fully revamped as against the current models (mostly face-lifts, rather than functionality-related).

The second large sub-segment for multimedia devices is smartphones, where the company has two ways – Windows Mobile devices and Symbian. Both directions are not prioritized, as the company can boast neither experience in such products creation nor capabilities for promotion. Let us begin with Motorola Z8, which is interesting in several aspects (we are now composing a big article on it - don’t let yourself miss this milestone).

This is the first UIQ 3.1 Symbian-smartphone to have no touch-sensitive display. The majority of programs written for UIQ 3.0 start up here as well. The device is expected to start shipping in June, at the price of 700 USD. It is not the lowest price it will go for but for a number of markets it will also come boxed with stereo Bluetooth headset, the S9, and a memory card of various size (512 Mb and bigger). The memory card will carry onboard specially adapted version of “The Bourne identity” movie. Nokia has already had such experience as well – a couple of its smartphones came pre-installed with Hollywood blockbusters.

What’s interesting about this device? First of all it comes in an off-beat form-factor “kick-slider”, when slid open the handset feels like breaking in two and thus ensures fit-to-face profile, which is comfortable. Second, this is the first product to supports microSD memory cards of high capacities, up to 32 Gb. For the time being you can get your hands on a 4 GB unit (will arrive in the market in the nearest future), by the end of the year 8 Gb cards are expected to debut. Due to its memory card abilities, the company has even called the Z8 a media monster. Tidy music playback quality with a number of restrictions, standards for a smartphone suite of apps, all these makings have made the device a rival to S60 Nokia-branded products. It is quite another matter, though, that its hefty price tag doesn’t get along with the omitted touch display, so the Z8 loses a face-off against Sony Ericsson’s smartphones. This device proves to be relatively niche-oriented for those who have a fancy for queer design. The price policy on this very interesting in other senses device isn’t adequate as of today.

Speaking of the impending products we are curios whether Motorola is going to present us with a great many of similar devices. The answer is simple - no, there won’t too many of them at least till the end of 2008. This follows from this device’s being a unique offering, much like the A-series smartphones before, the company has no experience in promotion techniques on the market, while the Motorola Z8 experience might prove to be far from positive (again the issue of the product’s price).

So the direction of Windows Mobile devices remains. For this range about a year ago the company unsheathed the Q and over a year, about one million of units were sold in North America. As company officials assure no QWERTY-device has ever stepped over this mark in such short time span. In Europe the Q comes in two versions – the Q8 and the Q9. The Q8 is a GSM-variation of Q9, which shows off support for UMTS (HSDPA). Both devices run on Windows Mobile 6, base off TI OMAP 2420, sport 96 Mb of RAM and 256 Mb of flash memory and a so-so 2 Mpix camera. Speaking of the advantages they mention the integration of messaging software by Good Technology (recently bought by Motorola), but for most markets it is not so essential. Against the background of Samsung’s activity with its already-on-sale Samsung U600i, which has been promoted since May 2007 in all GSM-markets, and HTC’s cooperation with operators and retailers in Europe, the outlook for demand for both Qs are not very promising. Lower product price could become the only place where they could hold upper hand, but in view of margin-oriented strategy, first quarters into the sales, this won’t happen. Going further, you shouldn’t be an oracle to predict products withdrawal from the market and the price of a few pennies afterwards. Before, the scenario of sales for such models as Motorola Mpx200, Motorola Mpx220 was exactly the same. The release of Windows Mobile devices is the company’s niche project and will be successful only in the native market where Motorola positions are unflagging. So we come to realize that WM-devices won’t be developed in the near term, and on a long run they will be no match for HTC’s solutions functionality-wise, this company is gaining more strength and it will be difficult to Motorola to compete with it.

As the conclusion on the multimedia segment development we may say that it will be formed in 2007-2008 with the help of the ROKR-range which will arrive for real in the market in the 3rd quarter of this year. The Imaging area is ignored by Motorola, the reason is absence of experience in shot processing algorithms, desire to save on hardware (camera modules). Until 2008 the given direction, regrettable, will be rather a secondary branch and only wide availability of 3D accelerators by NVidia in Motorola’s products will allow getting its cameras quality up to the market’s average level.

In spite of all claims, smartphones remain a niche solution for Motorola that require substantial expenses on promotion and which the company has no clear vision of. Thus Motorola will not mobilize its efforts towards these products.

Also, secondary multimedia products include branches going from the ROKR family with cut functionality, they will be popping up in the market regularly. And their fate, much like the W-series, depends on success of the forefathers in the form of the company’s senior offerings.

Fashion. Clear-cut separation of this segment, Iconic Products title – all this indicates, that the company has decided on putting what it does best, design, to better use. Everyone knows that the materials used, their quality, coating and so on are top priorities for Motorola and this is where the company was, is and will be the market’s best company. Even Nokia makes hopelessly late debuts with technologies that have been offered by Motorola for a long while (metal casings, for example).

Has the RAZR become an iconic product? The solution that the whole industry looks after? Definitely. The number of look-alikes has already reached 60, and I suppose will only grow with time. Motorola hit the bulls-eye with the release of the skinniest folder, however it had some less hyped solutions, like the women-aimed PEBL never became an icon, even though it had all the makings, even earlier we saw the rotate-styled Motorola v70, Motorola v80.


The employment of the RAZR’s idea could go on for ever, and the debut of the second generation doesn’t seem justified. But if you come to look at the sales of the Motorola V3, V3i, you will definitely notice that they are the most sought-after offerings in their segments. And if there is demand, it should be satisfied. What is getting to be the major limitation for buyers of stylish, fashion products these days? Let us say, for a part of the consumers, what narrows the audience? Simple – functionality. Even on release date, the RAZR could hardly blow anyone’s mind with specifications; its trumps were design and charisma.

The second RAZR family, the second-generation devices, the maker has decided to add stellar functionality to flashy looks and charisma. This is a completely safe move that allows making these phones really catchy, a true even on the market. The V8 won’t have any counterparts for at least a year to come, or even two. The image and functionality – fused together these two forge the bestsellers and over at Motorola they feel that. On the fact of it, the RAZR2 V8 is appealing, it does make a statement with its looks, and the inners don’t let it down either (read our review on the Z6 to get a general idea of its functionality, however the V8 is even more powerful).

Once again they say that “this time around, we are not going to send the price down for this premium-product in such rapid manner, it will be our flagship”. In fact, I’ve been listening to these claims from different Motorola’s people, occupying different posts, since 1998. Over the past 10 years, your humble servant made a number of mistaken, having believed in these words, and today I’m not following the same road again. The latest example of the RAZR shows that the price curve was quite upright, which was what enabled the company to achieve these impressive numbers. The V8 won’t be much different, with only one reservation – the price will not go down dramatically due to another limiting factor – the production costs is higher that the RAZR’s on release date. Two huge displays, a 500 Mhz-fast CPU and a handful of hardware solutions hold their own.

More of the second generation of RAZR will be available in the next article from the press-conference, and for now, I would like to focus on other Fashion segment centerpieces.

If we base on the company’s plans for 2007-2008, it is not falling into the iconic products fever – we will see about 5 of them in two years. The closest announcement will take place in September and put a more petite edition of the PEBL with some interesting features into the limelight. Such small number of offerings indicates that the company is looking for large-scale distribution of these handsets, in other words, making each of them a bestseller or something very close to that. Possible? With some fetching design cues it is impossible, but that is Motorola’s greatest secret, or the new design trend.


Apart from design, materials used, one of the most vital things is interface of the solution, i.e. how they look, sound, as the interface is what we encounter every day. This direction has always been developed by some particular makers for their designer solutions, fashion phones, yet ended up omitted in offerings for the mass market. For example, Nokia is into unique sonic experience the user gets with the Vertu, unique ringtones come preinstalled with all Nokia 8800 editions. Samsung came up with Black&White Premium GUI for its Ultra range (which stands for the user interface with out of the ordinary design). The products now differ not only in price, design, materials, but also in what they hide inside. Other examples reveling this trend is the interface of Samsung’s very own F-range, senior models running Windows Mobile with fully refined interface, so that you would never tell it is a WM.

Over at Motorola they have a strong understanding of that and in curse of 2007-2008 will be offering own interface solutions, thankfully they already have respective developments. Which technologies will become the core? There are some:

  • Haptics – tactile feedback between the user’s action and the handset. This feature manifests itself when the casing goes vibrating when you press a key (second generation of RAZR). A counterpart to Samsung’s VibeZ.
  • CrystalTalk – an equalizer enhancing the earpiece’s and microphone’s sensitivity in noisy environments can be activated from the menu. Similar to Whisper Mode found in the Ultra II family by Samsung, and a number of other models by this company.
  • 3D interface accompanied by a hardware accelerator. Eye-blink fast menu navigation, instant response (for example shot processing). Today this area is being intensively developed in Nokia for S60 products.
  • Interface speed – maximum speed of standard interactions is achieved via other hardware solutions. The user experience is ought to be solely positive, for this he needs straightforward, unsophisticated and speed interface.
  • Implementation of an analogue of Cover UI by Nokia for fold phones – enables the user to read SMS messages without flicking the device open, reply to them with templates, most interactions can be performed without folding the phone on (first implementation I the RAZR2).
  • Emotional content – every model will come packed with certain applications, tunes, pictures and services.

A unique trait is big focus on interface speed, which 3D accelerators provide for, it can be the magic wand that will set up a new trend on the market, bring Motorola back to the top. The company is now eagerly adopting all existing solutions, offers own developments – for example the RAZR2’s camera now comes armed with a counterpart to Sony Ericsson’s BestPIC feature, letting you take 8 shots in a rapid succession and then choose the most fitting snap. There is nothing to feel ashamed of when replicating positive experience – thankfully, Motorola’s solutions are also copied by other vendors.

Products launch strategy

Already for a couple of years, Motorola has been gradually changing its strategy concerning release of new products. Whereas the Motorola RAZR had come out alone with no cheaper counterparts available, which was instantly taken advantage of by other makers, the KRZR was inaugurated along with company’s native less sophisticated editions with resembling design. The company doesn’t hide it – the same policy, when similarly looking solutions are retailed for less money solutions, will be carried out in future as well.

But different market could still see release of one and the same model with varying radio module (UMTS, GSM, CDMA) on different dates. Now the company will do everything possible to shorten the gaps between the launches, look more after worldwide releases of the product. In such way, the second generation of RAZR should experience this new strategy first – in July the editions for Asia, the US and Europe will start shipping across the globe. At that the hardware and software differences of these solutions are enormous; these even might be considered as different products. Though, take a look for yourself.

V8 V9m V9
Linux/Java OS P2K OS P2K OS
500 Mhz processor speed 250 Mhz processor speed 500 Mhz processor speed
  Micro SD Micro SD
USB 2.0 High Speed USB 2.0 High Speed USB 2.0 Full Speed
Multi-shot image capture    
2 hour video length    
Video streaming, blogging and progressive download (carrier dependant) Video streaming Video  streaming blogging and progressive download (carrier dependent)
100-300 songs w/512M
approximately 1000 w/2G
Up to 2GB with removable card Based on available memory; on board 45 MB; up to 2 GB with removable memory
Yahoo and Hotmail email capabilities Carrier dependant Yahoo and Hotmail email capabilities
Synchronize phonebook, email and calendar over the air Carrier dependant Synchronize phonebook, email and calendar over the air
Read and reply to text from CLI Carrier dependant Point to point video - See What I See video sharing (Cingular only)
Crystal Talk Carrier dependant Crystal Talk

In fact, the most technically talented and offering most novelties in the interface and the feature pack is the Motorola V8, while the V9/V9m utilizes the P2K platform, which is aging in leaps and bounds. Nonetheless, the company is trying to make use of the synergy effect by releasing the products at the same time, which will bring more benefits. This is a really valid and justified move, giving more positive, though there are some negative sides as well (different software versions and the handsets’ abilities).

Additional color solutions for already-on-the-market and sought-after models will be presented on regular basis. For example, the classical RAZR early this summer will enhance its wardrobe with four chrome trims.

Hardware solutions by Motorola – major directions of development

As of today, Motorola has a mixed pile of technologies and hardware solutions. While the year 2006 and the beginning of 2007 were spent on standardization of various components (RF in particular), in future two software platforms will be prioritized: AJAR for cheap, budget solutions, the products running P2K will belong to here for some time as well, and Linux/Java – LJ 6.x. The latter platform is the company’s basement in the multimedia segment and the development of this one is most promising. The share of Windows Mobile and Symbian devices in Motorola’s portfolio will remain miserable, the company is not planning on expanding into these markets (the reasons described above).

The company is starting to struggle against extra production costs, and there are all prerequisites for that. Only by the middle of 2008 (the most optimistic forecast says it will happen early in 2008), they will shift to a new hardware platform. It won’t be a surprise if I say that “thanks” to its UMTS-chips supplier, Motorola can’t boast a wide range of 3G offerings – the solution employed by Motorola’s handsets is quite pricey. Unlike Nokia, the company hasn’t got comparable chipset price-wise. Rich Nottenburg is now doing its best in this direction and probably, the break will occur early in 2008.

WiMax might make debut in Motorola’s phones not earlier than the Q1 2008.

What next? A glimpse of Motorola’s prospect

When asked by the journalists whether a single product (RAZR2) was worth such expensive event, especially against the background of the first quarter’s loss, the Motorola’s representative replied with the following – “not only do we introduce our new product, but also showcase already announced models. We offer you our vision of the market, how and what we will create and where we are going. This is our strategy, the points, in which we see our opportunity to present the consumers with the best experience of using mobile phones and services”.

To me, this is almost the whole truth. Behind the scenes is the truth about what the company is currently going through – deepest reorganization of all management processes (look at the list of vice-presidents in January and today), it is trying to find the right way for growth and reshape the major business directions In other words, the company is once again full of life and ready to fight for the market. It is quite another matter, though, that in short-term, Motorola is going to have a tough year, maybe it will end 2007 with some profit, but that’s something they will have to struggle for. The same goes for the product line, the platform LJ (Linux/Java) will give the company competitive advantage on the market only by the middle of 2008. From that point on, we will have all the rights to expect Motorola to start doing better, and for now, the state of affairs for the company won’t be all sunshine and rainbows, while its range will be relatively scattered. But we couldn’t be happier with the fact that the company has picked the right way and is now progressing in this direction.


Eldar Murtazin (eldar@mobile-review.com)
Translated by Oleg Kononosov (oleg.kononosov@mobile-review.com)

Published — 17 May 2006

Have something to add?! Write us... eldar@mobile-review.com



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