Motorola Turnaround?

Rich Tehrani : Communications and Technology Blog - Tehrani.com
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Motorola Turnaround?

Motorola will be breaking up the company, bringing in new management and launching over 30 new products in the near future. Analysts remain very impressed but one wonders if they will be able to turn things around after over a decade of problems. This is a company which had challenges hitting numbers in the late nineties when other companies were booming.

Perhaps the best article headline on the topic is Motorola's Funeral Canceled: On Slow Road To Recovery, Says Citi (MOT).

It is the emphasis on new product development which is supposed to be the ultimate salvation for Motorola. You see, the theory goes the more products you have, the better you do. Similar to how Nokia does not have a defining product but a slew of good ones, Motorola hopes to become a lot more like Nokia.

I am still unconvinced. You see, launching a slew of phones that don't do well can break you as production and development costs will increase substantially.

I hate to keep discussing Apple but Steve Jobs and company launched their own cell phone when they realized during their ROKR partnership with Motorola that they needed to develop their own cell phone because Motorola couldn't make a phone that people wanted to buy.

People forget that Apple's first attempt to sell a mobile phone was a failure and credit seems to go to Motorola for the failure. I am impressed with the Q but I still have to wonder if 30+ mediocre products is what investors are betting on or do we have some guarantee that some of these products are really going to be hits.

This is especially true when you realize Apple launched a single product which redefined the cell phone industry.

If they are indeed going to follow through with this strategy what Motorola needs to do on the high end is to surround RIM and Apple offerings. They need to take the point product at RIM and have one with more features and one with less features which costs less.

They need to do the same with Apple. Have an iPhone clone with a keyboard, etc.

At the same time, they need to have a few low-end phones and  a few out of the box devices which make us salivate.

Also they need to figure out how to blend content -- audio, video, avatars and social networks into their devices. They need to the one-two punch of content to accelerate sales and compete with the iPhone/iTunes combo. Apple does this well and Nokia is trying to catch up. Perhaps a partnership with social networks and media companies makes sense.

I am not convinced an analyst upgrade is enough to proclaim Moto is back on track but I do think they are taking a step in the right direction.


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