 "Motorola...losing lustre as new product offerings see weak sales". Barely a month after scooping Brand of the Year honours at Media's 2006
Agency of the Year show, it may seem odd that Motorola finds itself
under the spotlight. However, after an unlikely revival that saw the US
giant ride its Razr handset back into Wall Street's affections, it
appears that Moto is losing lustre, with Q4 profits dropping by almost
half, stemming from declining prices for the Razr and weak sales of its
new offerings.
The setbacks come as the world's attention is firmly fixated on
Apple's new iPhone. Moto's own email device, the Q, may have received
early praise, but tough competition from the likes of Research in
Motion will only be amplified by the rollout of the iPhone.
Meanwhile,
Motorola continues to face cutthroat competition from Nokia, LG,
Samsung and Sony Ericsson, while faced with saturated developed
markets. Add in a handset interface which is, essentially, the opposite
of the Nokia model that is widely deemed 'Intuitive', and it is easy to
see why consumers are less than enamoured with Motorola's new product
range.
Still, in Asia at least, the signs are not all bad.
China has grown at a remarkable rate in recent years and is expected to
result in Moto's North Asian leadership team of CEO Michael Tatelman
and marketing chief Ian Chapman-Banks taking charge of the
newly-created Asia-Pacific region. The move will see the disbanding of
Moto's high growth markets division, which - ironically enough - has
seen some of the brand's most innovative marketing strategies, along
with the rollout of its lowest-cost handsets, causing consequent
pressure on profit margins.
With incomes rising in emerging
markets, Motorola can at least be assured that many Asian countries are
seeing surging demand for higher-priced products. Whether this will
placate either Wall Street or its shareholders is another story.
Motorola
attributes its poor results to 'an unfavourable geographical and
product-tier mix of sales' and has cut 3,500 jobs globally. If it can
successfully shift emerging markets up the mobile phone value chain,
Moto can prosper.
(Source: Media)
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