Motorola beats expectations but guidance disappoints as Xoom fails to match iPad

Posted:
in iPad edited January 2014
Motorola Mobility posted better revenues than expected, but lost $56 million in the quarter and provided disappointing guidance that sent its shares down 6 percent.



The company announced $3.3 billion in revenues for the quarter, higher than the $3.12 billion analysts had collectively predicted. But Motorola lost $56 million in the quarter, compared to a profit of $80 million in the year ago quarter.



Last year, Motorola's position in smartphones was rebounding while riding the wave of the "year of Android," benefitting from a tight relationship with Verizon Wireless, which had heavily promoted the firm's Android phone offerings under its Droid brand.



Motorola was also gearing up to launch its Xoom tablet running Android 3.0 Honeycomb, which was widely expected by Android enthusiasts to mount a significant challenge to Apple's iPad.



Instead, the launch of iPhone 4 on Verizon's network this spring blunted the prospects for a variety of new Motorola handsets that had banked on Verizon's 4G LTE network to carry sales, including the Motorola Atrix 4G, touted by the firm as "the world's most powerful smartphone." In the most recent quarter, Apple's smartphone continued to outsell all 4G handsets on Verizon's network by nearly a factor of two.



Additionally, Apple's iPad 2 launch left the Motorola Xoom stalled on its launch pad. The Honeycomb tablet had originally taunted the iPad as being suited to lemmings, while touting itself as having support for Adobe Flash as well as features of Google's latest Android 3.0 release, sold as being designed "from the ground up" for tablets.



Sales of the Xoom were depressed by its price, set higher than the iPad, as well as missing features such as its originally non-functional Flash support and a variety of other unfinished features in the brand new Android 3.0.



Motorola stated that it shipped 440,000 tablets in the most recent quarter, ahead of analyst expectations of just 366,000 but far lower than the 9.41 million iPads Apple sold in its most recent quarter.



A report by Reuters noted that Motorola provided a third-quarter "bottom line target ranging from break even to 10 cents per share, excluding unusual items."







The report cited Charter Equity Research analyst Ed Snyder as saying, "This looked a lot weaker than Wall Street had been expecting," contrasting expectations for 24 cents per share. "It's all lining up to be a weak quarter that's going to ripple though to the end of the year," Synder said.



Motorola's Xoom was to be the flagship tablet showing off Google's Android 3.0 Honeycomb, but instead appears to have delivered a blow to Google's reputation in consumer software about equal to the disastrous launch of Google TV, which is being blamed with tripping up Logitech by helping it lose $29.6 million it the latest quarter as more of its Google TV boxes were returned than sold, promoting the resignation of its chief executive Gerald Quindlen.



Original estimates for the Xoom hoped for sales of 3 to 5 million units in 2011, but so far the company has sold closer to a half million of the devices, depressing the prospects for other Honeycomb tablets and tablets in general outside of the iPad, and further reinforcing the reality that the iPad, like the iPod before it, exists as its own market with exclusive demand, rather than being part of a larger, generic "tablet" market.
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Comments

  • Reply 1 of 40
    cloudgazercloudgazer Posts: 2,161member
    Given that Moto 'Expanded distribution of the ATRIX? 4G smartphone and Motorola XOOM

    tablets into Latin America, China, Korea, and Europe'
    we have to assume that a big chunk of that 440k units are channel inventory.
  • Reply 2 of 40
    alfiejralfiejr Posts: 1,524member
    DED is back!



    same old question: 440,000 Xoom shipped in last quarter, but how many really sold? did they say? or sold to date going back two quarters?



    when they don't give you actual sales stats, you know they have to be crummy. when they are good, they boast about it.
  • Reply 3 of 40
    sflocalsflocal Posts: 4,500member
    This comes to no surprise. Motorola pulled the Xoom out of the oven half-baked, and essentially over-promised the functionality. They should be ashamed of themselves for bring a product out into the market before it was ready.



    If Apple pulled a Motorola, the trolls and iHaters would be out in full force to crucify Apple, yet barely a peep was out for Motorola's mishap.



    I'm a little surprised they shipped as much as they did, but a recent article has mentioned that Android's shipments are being eclipsed by their high return rates.



    http://techcrunch.com/2011/07/26/and...rns-are-30-40/



    Android fans I believe to be more of the "sheep" mentality than criticizing Apple fans. There have been so many disappointments on the Android side:



    Fragmentation

    Un-upgradeable phones, or long-delays of upgraded OS,

    Inferior build quality

    Inferior performance

    Malware

    Inconsistent experiences,

    <insert many more Android faults>



    The Android community complains about all these problems too, yet they keep preaching "Just wait till <insert next 'iOS-killing Android Food Group here>" or "Just wait till the next Motorola/Samsung/HTC/Xerox/Chinese Knockoff POS Bionic/WhipCream/ThunderPOS phone to put Apple in its place" and flat-out refuse to take a step back and see the mess that they are supporting.



    And then I'm here actually getting to "use" my iOS device.
  • Reply 4 of 40
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by sflocal View Post


    I'm a little surprised they shipped as much as they did, but a recent article has mentioned that Android's shipments are being eclipsed by their high return rates.



    They increased distribution to non US markets, so naturally they needed to ship a lot more. I wouldn't put too much stock by that article though, it's completely unsourced anecdotal evidence.
  • Reply 5 of 40
    j.r.j.r. Posts: 27member
    Quote:
    Originally Posted by sflocal View Post


    This comes to no surprise. Motorola pulled the Xoom out of the oven half-baked, and essentially over-promised the functionality. They should be ashamed of themselves for bring a product out into the market before it was ready.



    If Apple pulled a Motorola, the trolls and iHaters would be out in full force to crucify Apple, yet barely a peep was out for Motorola's mishap.



    I'm a little surprised they shipped as much as they did, but a recent article has mentioned that Android's shipments are being eclipsed by their high return rates.



    http://techcrunch.com/2011/07/26/and...rns-are-30-40/



    Android fans I believe to be more of the "sheep" mentality than criticizing Apple fans. There have been so many disappointments on the Android side:



    Fragmentation

    Un-upgradeable phones, or long-delays of upgraded OS,

    Inferior build quality

    Inferior performance

    Malware

    Inconsistent experiences,

    <insert many more Android faults>



    The Android community complains about all these problems too, yet they keep preaching "Just wait till <insert next 'iOS-killing Android Food Group here>" or "Just wait till the next Motorola/Samsung/HTC/Xerox/Chinese Knockoff POS Bionic/WhipCream/ThunderPOS phone to put Apple in its place" and flat-out refuse to take a step back and see the mess that they are supporting.



    And then I'm here actually getting to "use" my iOS device.



    But... but... Android is open! It HAS to be better!
  • Reply 6 of 40
    gatorguygatorguy Posts: 20,291member
    Quote:
    Originally Posted by sflocal View Post


    I'm a little surprised they shipped as much as they did, but a recent article has mentioned that Android's shipments are being eclipsed by their high return rates.



    http://techcrunch.com/2011/07/26/and...rns-are-30-40/



    That article was already panned by BoyGeniusReports, who called it "Absolutely Ridiculous". Their sources have put the return rate in the low single digits.



    http://www.bgr.com/2011/07/28/40-of-...ly-ridiculous/
  • Reply 7 of 40
    Quote:
    Originally Posted by Alfiejr View Post


    DED is back!



    same old question: 440,000 Xoom shipped in last quarter, but how many really sold? did they say? or sold to date going back two quarters?



    when they don't give you actual sales stats, you know they have to be crummy. when they are good, they boast about it.



    Motorola might not have actual sell-through numbers, especially in instances where carriers sell to 3rd-party retail partners. They would have a very reasonable estimate at the least.



    MMI said it expects sales to be less that 440K for this quarter. If that tells you anything. If units don't move through the channel, can't sell more until its worked down. Also, MMI lowered it's full year forecast for tablets. Obviously it's not selling well to consumers.
  • Reply 8 of 40
    quinneyquinney Posts: 2,524member
    The Zebra-Hinny can't keep up with Secretariat.
  • Reply 9 of 40
    mdriftmeyermdriftmeyer Posts: 7,230member
    Quote:

    ``Motorola stated that it shipped 440,000 tablets in the most recent quarter, ahead of analyst expectations of just 366,000 but far lower than the 9.41 million iPads Apple sold in its most recent quarter. ''



    Seriously, do we even need to discuss the fantasy that Apple isn't crushing every competitor in the Tablet space?
  • Reply 10 of 40
    Quote:
    Originally Posted by Gatorguy View Post


    That article was already panned by BoyGeniusReports, who called it "Absolutely Ridiculous". Their sources have put the return rate in the low single digits.



    http://www.bgr.com/2011/07/28/40-of-...ly-ridiculous/



    30-40% isn't unreasonable for one particular store concerning a specific device. I heard HTC Thunderbolts had high return rates, and ATRIX too. However, I am convinced it's do to sales pressure. Sales staff pushing the device on them, promising if they don't like it, to return it in 5 days swap for what u were really looking for. Hero phones usually have volume commitments and stores have to meet those, and there can be larger rips, or commissions on those devices. So, I think its extremely isolated, and pertains to instances where devices are being recommended for a customer that would have little chance not to like it.
  • Reply 11 of 40
    jdsonicejdsonice Posts: 156member
    Quote:
    Originally Posted by J.R. View Post


    But... but... Android is open! It HAS to be better!



    Open like a sieve?
  • Reply 12 of 40
    sflocalsflocal Posts: 4,500member
    Quote:
    Originally Posted by Turley Muller View Post


    30-40% isn't unreasonable for one particular store concerning a specific device. I heard HTC Thunderbolts had high return rates, and ATRIX too. However, I am convinced it's do to sales pressure. Sales staff pushing the device on them, promising if they don't like it, to return it in 5 days swap for what u were really looking for. Hero phones usually have volume commitments and stores have to meet those, and there can be larger rips, or commissions on those devices. So, I think its extremely isolated, and pertains to instances where devices are being recommended for a customer that would have little chance not to like it.



    Based on what I see going on at stores like Best Buy, the salespeople there tend to be Android fans and really push those phones. A common line I hear, "It's just like iPhone / iPad, just cheaper/better".



    I'd bet money that they consumer takes it home after falling for that line, hate the Android experience and return it. But hey, Android is counted as an "Activation".
  • Reply 13 of 40
    gmcalpingmcalpin Posts: 266member
    Quote:
    Originally Posted by jdsonice View Post


    Open like a sieve?



    Open like a hula hoop. Sieves catch some things.
  • Reply 14 of 40
    gatorguygatorguy Posts: 20,291member
    Quote:
    Originally Posted by Turley Muller View Post


    30-40% isn't unreasonable for one particular store concerning a specific device. . .



    IMO it would still be completely unreasonable and highly unlikely.
  • Reply 15 of 40
    woodlinkwoodlink Posts: 198member
    You know, the obvious disparity between Apple's sales of iPad's et.al. and whatever meaningful sales of Brand X's tablets really highlights the depth and breadth of Apple's engineering prowess.



    Job's said it so much himself when introducing the original iPad.



    He said something to the effect that going into the project of making the iPad, it had to be a KILLER product or the market would flatly reject it.



    Well, the market has embraced it in a way that all of Brand X could have never imagined.



    -insert Ballmer's misguided chuckling



    -insert Moto's mounting quarterly loses



    -insert the pennies on the dollar that Android developers have made on Android tablets vs. iOS-



    Are the Brand X's really that out of touch?



    I'd HATE to be competing against Apple these days.
  • Reply 16 of 40
    8002580025 Posts: 172member
    Motorola was also gearing up to launch its Xoom tablet running Android 3.0 Honeycomb, which was widely expected by Android enthusiasts to mount a significant challenge to Apple's iPad.





    And what do they expect when that tablet seems to resemble something purchased at a toy store?
  • Reply 17 of 40
    michael scripmichael scrip Posts: 1,912member
    Quote:
    Originally Posted by Woodlink View Post




    I'd HATE to be competing against Apple these days.



    I hear the JooJoo is coming back... didn't they learn the first time?



    http://thisismynext.com/2011/07/28/f...c-crosses-fcc/
  • Reply 18 of 40
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by mdriftmeyer View Post


    Seriously, do we even need to discuss the fantasy that Apple isn't crushing every competitor in the Tablet space?



    There's still a question of degree, and these results shed a little light on that. There's no doubt that Apple's share of sales is far greater than the 60% share of shipments, but is it 80%? is it 90%? more? We don't know and it's still worth seeing what data we can grub up to shed light on it.



    The netmarketshare numbers would indicate Moto has about 50% sell-through, so if that is true across the board we'd be looking at 80% for iPad. But Moto's sell-through could be worse than that if netmarketshare is over-sampling US web-usage.



    The interesting thing is that if the Xoom only sold 350k-ish units and only shipped 700k-ish, then is the 1.3% honeycomb number from Google an over-estimate? Maybe android tab owners visit the app market more often than phone owners.



    As far as I know the Xoom was until recently the only honeycomb tablet in existence. In which case going forward we need to assume that numbers based on estimates from android market statistics are off by a factor of between two and four.
  • Reply 19 of 40
    gromitgromit Posts: 37member
    If we are going to ignore 'Sales', and instead substitute 'shipments' for products on tne market, maybe we should subtract 'returns' or 'remainded' or 'bargain basketed' from the shipped figure, to get a more accurate figure of kit that doesn't sell.



    Anyone can produce junk and ship it. But if hardly anyone buys it, and ypy end up selling it at a loss, whay is the point?
  • Reply 20 of 40
    sockrolidsockrolid Posts: 2,788member
    iPod achieved its success not just by being shiner and having a better interface. iTunes propelled iPod to the top. In 10 years iTunes went from "Rip. Mix. Burn." to being the #1 music retailer in the US (back in spring of 2008) to now having reached 15 billion app downloads (July 7, 2011.)



    iPod also got a huge helping hand from Sony. Sony essentially handed the worldwide portable music player market over to Apple. Sony tried too many proprietary storage media (MiniDisc, Memory Stick, UMD) and tried locking users in with ATRAC copy protection. They threw away all that Walkman mindshare and market share. Apple gladly took it and never looked back.



    So here we are, less than 1.5 years after iPad was first released. iTunes is still there. It's the 800 pound gorilla in the room that all other consumer electronics makers are trying to ignore. It powers iPad and all other Apple mobile and desktop computing devices. There are hundreds of millions of iTunes accounts with credit cards. And Apple is leveraging iTunes again as it pioneers the next era of computing, the post-PC era. Just the way they leveraged iTunes in the post-Walkman era of portable entertainment.



    Oh, and iPad is getting a helping hand from Microsoft. Microsoft and their hardware partners managed to sell a few million Windows tablets / slates / UMPCs / WInCE / Pocket PCs / whatever. In 10 years of trying. They just don't get it. Hammering the square Windows peg into the round pad hole didn't set the consumer electronics world on fire, and it never will. They showed Apple how not to do it and got left behind in the dust.



    The post-PC era is looking more and more like the post-Walkman era turned out. An all-Apple show.
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