September 05, 2007, 4:50 PM — Motorola Inc. has a strategy for improving its struggling cell phone business: be boring.
That's what Chief Financial Officer Tom Meredith said on Wednesday during the Citi Investment Research Global Technology Conference.
"I believe we can right our ship by being boringly consistent," he said during a webcast of the conference.
Motorola's history as a cell-phone developer is anything but boring, littered with iconic phones from the StarTac clamshell ten years ago to the recent hit with the Razr. But you'd be hard pressed to name an iconic product from market leader Nokia Corp. or Sony Ericsson Mobile Communications AB, Meredith noted. "Yet, when you look at their profitability and successes, you see they have a portfolio that was complete and ran the gauntlet from mass market to feature to enterprise and they effectively competed more effectively than we did," he said.
Taking a cue from competitors, Motorola will focus going forward on developing a broad portfolio of phones that will be attractive to a wide range of users, rather than looking for the next Razr, he said.
Combined with a couple of other new strategies, Motorola should be able to regain lost market share, he said. For instance, Motorola hopes to do better in developing markets like India and China. While Meredith didn't describe how, he did point to ways that the company has stumbled there recently. He said that Motorola missed an opportunity with its Moto phone, which was designed to be a low-end handset for developing markets. That phone failed because it didn't have a color screen and neglected to recognize how important texting is in its target markets, he said.
Motorola should also benefit from some developments Apple Inc.'s iPhone has spurred. Operators have historically resisted including Wi-Fi capabilities in phones, he said. But since the iPhone includes Wi-Fi, the operators are starting to come around and recognize that it's inevitable, Meredith said. "I think Steve [Jobs] and Apple did companies like Motorola a favor in that regard," he said.
The iPhone may also have generated interest in the touchscreen concept. Motorola has sold 12 million phones with touch screens, primarily in China, but hasn't targeted them to North America. The company is still watching the market and listening to carriers but it may introduce touchscreen phones in North America, he said.
Motorola recently reported that slow sales of mobile phones contributed to a second quarter loss of US$28 million. It also cut 3,500 jobs in the first half of the year and is in the process of laying off another 4,000.
The struggles have put company CEO Ed Zander in the spotlight, but the board has not had a "no confidence" vote in their leader, Meredith said, in response to a question from the audience.
