Monday, March 24, 2008

3rd place, going on 4th

Motorola has managed to fall from 2nd to 3rd in the global handset market, and the bad news doesn’t seem to be ending any time soon. Elizabeth Woyke of has an interesting summary of how Motorola is doing its best to get to 4th or 5th.

Bigger isn’t always better, but Woyke summarizes some advantages of market share:

...the industry is expanding beyond hardware to span technology, fashion, applications and operating systems--what Milanesi calls "the whole ecosystem of services."

Elite rank isn't just a symbolic win. Placing in one of the top three positions in the industry translates to big volumes--which, in turn, lowers costs and increases a manufacturer's clout. No. 1 Nokia, for instance, will ship more than 500 million phones this year, more than twice as many as No. 2 Samsung. "From a vendor's perspective, it's good to be in the top five and better to be in the top three," says Milanesi.

Adding to everyone's stress is that Nokia has opened a wide gap between it and competitors everywhere but North America. Here the latter, it’s Motorola (#3) vs. Samsung (#2) and LG (#5).

Samsung is doing well

thanks to aggressive moves into Europe and emerging markets, a greater focus on consumer research and an embrace of open operating systems, including Windows Mobile, Symbian and Google's Android.

Note to readers: Android is potentially much more open than Windows Mobile, with Symbian somewhere in between.

The article notes the speculation that Motorola may cut half of the staff at its Birmingham (England) design center, which is the only piece it has left from its purchase three years ago of the innovative mobile phone startup, Sendo. It also guesses that the announcements at next week’s CTIA Wireless show will be underwhelming.

Motorola still has a strong brand, distribution, and lots of talent. Its leadership seems to be of mixed quality, and its strategy for dealing with increased competition and commoditization has been failing badly. I hope it can turn around, but I’m not going to bet money on it.

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