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Motorola outlook sinks on threat of Verizon iPhone

post #1 of 26
Thread Starter 
Motorola Mobility shares were down nearly 6 percent after it warned it would again post quarterly losses this quarter as it faces new competition from Apple's iPhone on Verizon Wireless.

Starting toward the end of 2009, Verizon's heavy promotion of its Droid-branded Android phones has helped Motorola stage a smartphone-centric return to profitability. The mobile maker has been the largest beneficiary of Verizon's push to counter AT&T's exclusive rights to carry iPhone in the US over the last year.

Verizon largely gave up on RIM's BlackBerry after that company was unable to deliver a worthy competitor to iPhone in 2008 and 2009, and put its marketing muscle behind new Android models from Motorola, HTC, and most recently Samsung.

This past fall, Motorola split its operations, forming the new Motorola Mobility to sell phones and TV set top boxes and Motorola Solutions to handle its other businesses.

Motorola Mobility subsequently posted a quarterly profit of $80 million on revenues of $3.4 billion, about $2.4 billion of which were derived from phone sales of 11.3 million, 4.9 million of which were smartphones, according to a report by Reuters.

With Verizon now able to sell the iPhone, Motorola will now have to directly compete for attention on the largest US carrier by subscribers, even as Verizon is likely to direct most of its advertising toward selling the iPhone, due to its proven ability to upgrade mobile users to smartphone data contracts.

Verizon is expected to make its $30 unlimited data plan the only option for new iPhone 4 buyers, along with an optional $20 tethering plan that allows users to share their mobile connection with up to five notebooks, iPads, and other WiFi devices.

Motorola will also be selling its new Android 3.0 Honeycomb based Xoom tablet in direct competition with the cheaper iPad, as well as a new iPad 2 expected to be released around the April launch anniversary of original model.
post #2 of 26
Hello Moto!
post #3 of 26
Nelson: Ha Ha!
post #4 of 26
Shame that a once powerful and innovative company is in trouble. I think the Xoom is their last attempt to be something.
post #5 of 26
I guess Droid didn't!
post #6 of 26
Quote:
Originally Posted by NasserAE View Post

I guess Droid didn't!

Remind me... Droid does what??? \
post #7 of 26
Quote:
Originally Posted by ghostface147 View Post

Shame that a once powerful and innovative company is in trouble. I think the Xoom is their last attempt to be something.

For motorola... it's just a comedy of errors...

They invented cell phones...

After the Startac... they fell off the wagon
Almost went out until the Razr came in and saved the day...

They had nothing to top the Razr, then they once again, fell off the wagon, due to iPhone in 2007
Almost went out again, until Android / Droid came in and saved the day.

Now... yet again, looks like that wagon is tipping over again. This time, being pushed over by VZ/AAPL.

I see a pattern here. Looks like the bigwigs can't seem to look beyond a quarter to see what's out on the horizon. Total failure to execute.
post #8 of 26
Quote:
Originally Posted by ghostface147 View Post

Shame that a once powerful and innovative company is in trouble. I think the Xoom is their last attempt to be something.

I'm sure they split the company in order to sell this pig.

If the Xoom doesn't then Moto Mobility will be on the chopping block and will be snapped up by somebody... the patents alone must be worth something.
Hmmmmmm...
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Hmmmmmm...
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post #9 of 26
Motorola and the Droid gangs are about to be hit with the Apple wrecking train.

And there will victims everywhere.
post #10 of 26
Quote:
Originally Posted by sflocal View Post

For motorola... it's just a comedy of errors...

They invented cell phones...

After the Startac... they fell off the wagon
Almost went out until the Razr came in and saved the day...

They had nothing to top the Razr, then they once again, fell off the wagon, due to iPhone in 2007
Almost went out again, until Android / Droid came in and saved the day.

Now... yet again, looks like that wagon is tipping over again. This time, being pushed over by VZ/AAPL.

I see a pattern here. Looks like the bigwigs can't seem to look beyond a quarter to see what's out on the horizon. Total failure to execute.

Nice analysis! lol. I never actually looked at it that way.
post #11 of 26
Quote:
Originally Posted by island hermit View Post

I'm sure they split the company in order to sell this pig. ...

Maybe HP can snap up Motorola Mobility and put it in their has-been trophy case. Right next to Palm.

Sent from my iPhone Simulator

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Sent from my iPhone Simulator

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post #12 of 26
Motorola... isn't the company where Dilbert works?
Please don't be insane.
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Please don't be insane.
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post #13 of 26
I think I remembered a few years back where Apple's iTunes music were first to work on one and only one Moto's phone (couldn't remember which model) but it didn't went well. The synergy between Apple and Moto didn't sync well apart from iTunes and Moto's phone. So if M thinks they will marry well enough with G then they are in for a tough ride. . . .time will tell.
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post #14 of 26
Lg and Samsung are probably not as effected by this as much as Motorola and HTC.
post #15 of 26
Sure MOTO will suffer without a cohesive game plan. But there is no doubt that an alt to IOS has to take form, and at this moment that appears to be Android.
As the saying goes; where elephants fight, ants die- and for RIMM, the footfalls are getting
uncomfortably close.
post #16 of 26
Quote:
Originally Posted by spiced View Post

I think I remembered a few years back where Apple's iTunes music were first to work on one and only one Moto's phone (couldn't remember which model) but it didn't went well. The synergy between Apple and Moto didn't sync well apart from iTunes and Moto's phone. So if M thinks they will marry well enough with G then they are in for a tough ride. . . .time will tell.

That would have been the ROKR. Yes, that relationship was doomed to fail from the get go. The phone was junk and it had so little memory, it could only hold about 100 songs according to Wikipedia:

http://en.wikipedia.org/wiki/Motorola_ROKR_E1
post #17 of 26
Who cares, there are millions of people that love their blackberry's and BBM, Motorola will be just fine.
post #18 of 26
Quote:
Originally Posted by zindako View Post

Who cares, there are millions of people that love their blackberry's and BBM, Motorola will be just fine.

Yeah, they will be just fine...... until the VZ iPhone actually goes on sale.
post #19 of 26
Puts me in mind of Horace Dediu's article about Android, money and the incumbents.

He argues that Google has in effect made a bet with the very handset manufacturers most financially squeezed by changes in the industry (Motorola, LG, Sony Ericcson, Samsung) and so may see Android hamstrung by hardware partners who only adopted the OS in the first place because they were clutching at straws. As he says:

Quote:
So how likely are these disrupted ex-giants to recover and take Android forward? My bet: slim to none. Android does not offer more than a lifeline. It is not a foundation for long-term profitability as it presumes the profits accrue to the network and possibly to Google. Profit evaporation out of devices to Google may be a possibility at some time in the future, but only if the devices dont need too much attention to remain competitive. But because theyre still not good enough (and they wont be for years to come), its certain that attention to detail is what will be most important to stay abreast of Apple.

So here we have the real challenge to Android: partnership with defeated incumbents whose ability to build profitable and differentiated products is hamstrung by the licensing model and whose incentives to move up the steep trajectory of necessary improvements are limited.

Of course for the time being you can apparently make Android buyers salivate by simply putting the latest parts in Yet Another Android Phone, possibly bumping up the screen size slightly.

But that only takes you so far. Motorola managed to get a few (barely) profitable quarters out of their Android phones, if they go back to losing money how likely is it that they're going to have the wherewithal to even design, much less manufacture and market, a genuinely desirable phone?

And if they can't even get the ad exposure from Verizon, how are they going to sell another Droid?

I suspect that what's going to happen is that HTC is going to become the defacto name brand Android hardware manufacture, and pretty much everyone else (excepting maybe Samsung, but then they're insane so who knows?) dropping out with the bulk of the sales going to carrier branded free or BOGO phones.
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post #20 of 26
Quote:
Originally Posted by addabox View Post

Puts me in mind of Horace Dediu's article about Android, money and the incumbents.

He argues that Google has in effect made a bet with the very handset manufacturers most financially squeezed by changes in the industry (Motorola, LG, Sony Ericcson, Samsung) and so may see Android hamstrung by hardware partners who only adopted the OS in the first place because they were clutching at straws. As he says:

[]
Of course for the time being you can apparently make Android buyers salivate by simply putting the latest parts in Yet Another Android Phone, possibly bumping up the screen size slightly.

But that only takes you so far. Motorola managed to get a few (barely) profitable quarters out of their Android phones, if they go back to losing money how likely is it that they're going to have the wherewithal to even design, much less manufacture and market, a genuinely desirable phone?

And if they can't even get the ad exposure from Verizon, how are they going to sell another Droid?

I suspect that what's going to happen is that HTC is going to become the defacto name brand Android hardware manufacture, and pretty much everyone else (excepting maybe Samsung, but then they're insane so who knows?) dropping out with the bulk of the sales going to carrier branded free or BOGO phones.

I think Horace is dead on. Its easy to first conceive a battle between AT&T and Verizon for iPhone customers, but I think that will be the smallest migration to the Verizon iPhone. The biggest crunch will be within Verizons own subscriber base. Anecdotally I cant tell you how many people have non-iPhone smartphones because they didnt want to leave Verizon or go to AT&T.

That said, I fully expect Androids numbers to keep increasing faster than Apples. Verizon is a big carrier but when we consider the number of carriers, subscribers and handsets running Android around the world at much lower prices it seems impossible to imagine Apple could sell more units than all units shipping with Android.

And lets not forget Michael Dell saying that buying the WP7 license is cheaper than using the free Android OS. Im not sure if he meant with all the app Google charges for that MS offers as part of WP7 or for creating drivers and whatnot for Android, but his point seems clear. If this was a prediction from Dell Id be skeptical as his track record is poor, but this was a comment about the current state of their smartphone development.
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post #21 of 26
First Android adoption in the US seems to be primarily fueled by feature phone user uptake, with some erosion of the Microsoft marketshare. With Microsoft strong-arming licenses to the handset makers (via lawsuits and threatened lawsuits) to recover their losses, Android becomes much more dependent on up-selling feature phone users into smartphones at ever-decreasing handset costs. Android's marketshare will devolve into low-end, cheap smartphones, which has no impact on Google's bottom line, only the handset makers. Google makes out like a bandit - because they get the widening base of handsets running Android - which in turn supports their ad revenue via ad-supported free apps. As long as ad revenue brings dollars into dev coffers, life will be OK. WP7 will help Redmond recover some marketshare - enough to let M/soft keep some semblance of competition and distract Goggle with a differentiated user interface. Will Microsoft spend the marketing dollars to establish WP7 mindshare - pulling an Apple essentially, or will they try to drive some ad bucks by the carriers away from Android and into WP7 ads placement.

Will Android continue to fragment as carriers seek to differentiate their installs from other carriers' installs of the OS/apps? Will they ever catch-up to the latest version of Android, as Android keeps trying to feature-leap iOS? Will that matter to Google's bottom line? Is a cheap lightweight semi-smart smartphone running Android the next wave of handsets? Will Nokia light a fire and bring a market-changer to the US market, or will they see their feature phone segment steadily eroded by Android? Stay tuned viewers - the best is yet to come!
post #22 of 26
Quote:
Originally Posted by spiced View Post

I think I remembered a few years back where Apple's iTunes music were first to work on one and only one Moto's phone (couldn't remember which model) but it didn't went well. The synergy between Apple and Moto didn't sync well apart from iTunes and Moto's phone. So if M thinks they will marry well enough with G then they are in for a tough ride. . . .time will tell.

Screw that. Does anyone remember the whole AIM alliance and how much a failure that was?
post #23 of 26
Quote:
Originally Posted by zindako View Post

Who cares, there are millions of people that love their blackberry's and BBM, Motorola will be just fine.

Sounds exactly like a reading of MOT's board meeting minutes.
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post #24 of 26
Quote:
Originally Posted by solipsism View Post


That said, I fully expect Androids numbers to keep increasing faster than Apples. Verizon is a big carrier but when we consider the number of carriers, subscribers and handsets running Android around the world at much lower prices it seems impossible to imagine Apple could sell more units than all units shipping with Android.

"In three years, maybe less, Android will be way bigger than us. And well have the better business.

Peace."

Fake Steve Jobs (08/03/2010)
post #25 of 26
Double post.
post #26 of 26
Quote:
Originally Posted by addabox View Post

Puts me in mind of Horace Dediu's article about Android, money and the incumbents.

He argues that Google has in effect made a bet with the very handset manufacturers most financially squeezed by changes in the industry (Motorola, LG, Sony Ericcson, Samsung) and so may see Android hamstrung by hardware partners who only adopted the OS in the first place because they were clutching at straws. As he says:



Of course for the time being you can apparently make Android buyers salivate by simply putting the latest parts in Yet Another Android Phone, possibly bumping up the screen size slightly.

But that only takes you so far. Motorola managed to get a few (barely) profitable quarters out of their Android phones, if they go back to losing money how likely is it that they're going to have the wherewithal to even design, much less manufacture and market, a genuinely desirable phone?

And if they can't even get the ad exposure from Verizon, how are they going to sell another Droid?

I suspect that what's going to happen is that HTC is going to become the defacto name brand Android hardware manufacture, and pretty much everyone else (excepting maybe Samsung, but then they're insane so who knows?) dropping out with the bulk of the sales going to carrier branded free or BOGO phones.

That snippet is gold - shall read the full link later. I imagine Android will end up being the next Symbian if things continue going the way they are now. The iPhone can have the premium segment. Not sure how this affects HP and Microsoft's efforts though. I'm not so sure we will end up with only two dominant mobile operating systems.
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