The transparently absurd happy talk emanating from the company that practically invented the mobile phone is like the ramblings of a punch-drunk boxer who has taken a few too many hits to the head. Their quarterly earnings report shows they made a small profit last quarter and they would like to have people believe they are on the mend and returning to greatness. But even a quick look at the numbers indicates otherwise.
 
Motorola did manage to produce a $26 million profit but it was due to draconian cost cutting measures including the elimination of more than 7,000 jobs. Mobile Devices (the mobile phones group) remains their weakest business, with $1.8 billion in sales and an operating loss of $253 million. In the same quarter last year, Mobile Devices lost $346 million so they claim to be moving in the right direction. But the turnaround can be attributed entirely to cost cutting since cell phone shipments were down almost 50 percent from last year to 14.8 million. It’s obvious - all they can do now is hang on until the holiday season and try to unload as many of their mobile phones with Google’s Android operating system as they can (at whatever price no matter how low). But other mobile phones come with Android too, and anyway, Android is about Google, not Motorola. After the holidays Motorola’s days as a maker of mobile phones are over. They’ll sell off their Mobil Devices division for pennies on the dollar, exit the mobile phone market, and retreat into the safety of slow moving government markets and regulated telecom markets.
 
A Grim Lesson in How Responsiveness Trumps Efficiency

What happened? Ten years ago they practically owned the world market for mobile phones. They had the coolest, smallest mobile phone I ever saw up to that time. Using it made me feel like a cross between a crew member on the Starship Enterprise and a Secret Service agent assigned to protect the President. Do you remember the StarTAC? Did you own one?

At the end of the 20th century, Motorola made the best mobile phones at the lowest prices. Motorola was the company that invented Six Sigma; they had cost and quality down to a science. They had the best engineers and the most efficient manufacturing processes and they used those strengths to dominate mobile phone markets around the world. Little did they realize how drastically the game was about to change.

The first hint that the game was changing came when a Finnish company that previously made things like paper products and rubber boots and electric cables decided to get into the mobile phone business. Their phones cost a bit more and were not as reliable as Motorola phones. But Nokia understood phones were becoming more than just phones; they were fashion accessories. Customers wanted a good phone at a good price but it didn’t have to be the most reliable or the lowest priced phone. It had to be fashionable. Nokia responded. By the early 2000s what self-respecting teenager or 20-something would put anything but a brightly colored and ever so stylish Nokia onto their belt or into their purse?

Then along came a small Canadian maker of two-way paging systems. Motorola knew who they were because that company competed against Motorola’s SkyTel paging system, but they were not seen as much of a threat. Yet Research In Motion (RIM) was responding to changing customer desires, and by 2003 this company was selling a product that was a combination mobile phone

You do not have flash or javascript support.

Average (2 votes)

Reply