Motorola has seen better days. Since the mobile-pioneer led the world as the largest maker of cellphones in the early 1990’s, Motorola has seen its market share, profits and influence sliding by the day. Motorola has been bleeding from its mobile phone division for too long – the company recently posted 2008 operating losses of $2.2 billion, leading into its suspension of dividends. So, what does Motorola co-CEO Greg Brown have to say for himself and Motorola?
A recent interview between the Financial Times and a surprisingly revealing Greg Brown yielded some interesting insight into Brown’s thoughts on his company’s free-falling decline. The company that essentially pioneered the cellphone rescued itself from decline with the fantastically successful Motorola RAZR line of handsets. Unfortunately, the RAZR’s success wasn’t enough to carry Motorola more than a few years. The recent push toward feature-packed smartphones and high-speed wireless data connections has turned the once-simple cellphone into a powerful, web-connected computer. And, therein lies Motorola’s problem.
Mr. Brown told the FT that he and Motorola failed to “see the trends coming in smartphone and 3G with the kind of foresight and customer attention that it should have.” The world’s overall change in perception of the mobile phone, from just a voice-calling phone to a self-contained communications platform, essentially left Motorola behind. Brown also blames his company’s woes on the failure to recognize the importance of software and focusing too heavily on hardware design. It seems Motorola has been trying to reproduce its former success using the same, obsolete strategy that made the RAZR an international hit. And, Motorola’s push to unify its portfolio with a single Linux-based operating system didn’t help matters much.
Motorola’s failures as a viable mobile phone manufacturer are multi-faceted, but co-CEOs Greg Brown and Sanjay Jha are looking to a brighter future. A future where Motorola redefines itself as a niche player in mid- to high-end mobile market. Using Google’s Android OS, Motorola will concentrate sales on the US, Latin America and Chinese markets. The short-term goal is to cut costs at Motorola by $1.2 billion in 2009, which may require half of Motorola’s estimated 10,000 employee-strong mobile unit. Motorola will be delaying its once-planned spin-off of its mobile division as it concentrates on coming back to profitability.
Motorola may find that concentrating on its strengths as a mid- to high-end mobile maker will start turning things around. But, given the current economic climate, Motorola will first concentrate on stopping its money-bleed.
[Via: FT]