Motorola’s Cell Phone Business – Is It Facing Business As Usual?

Implications: In 1990, Motorola dominated the cell phone business. In the mid-1990s and late 1990s Motorola faced stiff competition from Ericsson, Nokia, Samsung, Lucky Goldstar (which became LG), Kyocera, and NEC. However, Motorola was able to prevail more often than not. However, what Motorola did not face was China; until now. In fact none of the aforementioned vendors had to really deal with the Chinese as a real competitive threat until recently.

Analysis:

I feel for Motorola. In years past this company was as the forefront of innovation. I remember the day a carrier employee held up one of the first small handheld cell phones (and yes it was made by Motorola) that could fit in a shirt pocket and transmitted at an ERP of 0.8 Watts. Huge news in the early 1990s. The carrier employee made another telecom executive look foolish because the telecom executive said that cellular technology had not progressed far enough to build anything other than the Brick phone. Talk about bad timing for the ex-telecom executive.

Yes those were the days that despite being a source of cheap labor, China had not progressed that far in wireless or any kind of telecom technology. At least that is what we in the industry thought. Today, China is more than a source of low cost labor. China is a technological threat on so many fronts that one can pretty much say with confidence that a Chinese company will enter the marketplace if it is not already there. China may provide cheap labor but it also has smart people. So at some point Chinese engineers will begin to innovate rather than copying ideas from Motorola and other, and that is when the trouble will really begin for the entire handset industry.

In the old days, Motorola was able to dominate the business with smaller handsets and cool looking designs. Heck, it was easier back in the 1990s; there was only voice and low end web surfing. Today, Motorola needs to worry about look, function, displays, and applications (music and video). The iPhone looks cool and has a following of Apple-Heads. Basically, iPhone has got this Steve Jobs celebrity following that will buy anything that says Apple. Let it never be said that having cult-like status with consumers does not help.

Motorola needs to come up with something that will top iPhone’s Apple brand. Maybe Motorola ought to come up with a new phone and call Blade rather than Razr. If the movie franchise was still operating, Motorola could let Wesley Snipes use the Blade handset in a 4^th Blade movie. No, this is not an ad for Wesley Snipes, but you get my meaning. This is called product placement. Motorola needs to find a way to emerge from the herd of handset manufacturers.

Motorola’s troubles have not even peaked yet. Motorola is not alone in this.