Motorola's Handset Strategy - Wireless Turkeys 2008

Why is it a turkey?

Motorola started the year by confirming that it was considering spinning off its mobile devices business [1] entirely. The company's prospects did not improve as the year went on. The first quarter saw Motorola post a $194 million loss [2] as it shipped 27.4 million units. In the second quarter, the company posted a $4 million profit, but revenue dropped 7.4 percent to $8.08 billion [3], and the company's handset business continued to struggle.

In early August Motorola named former Qualcomm executive Sanjay Jha co-CEO and head its handset division. Jha was tasked with turning the flailing business around. The company's entrée into the smartphone market in the wake of the iPhone 3G was the Krave ZN4 [4], which it billed as both a touchscreen phone and a flip phone.  But excitement over the phone could not disguise problems with the company's handset strategy, and Motorola reported a $397 million third quarter loss [5], including an $840 million loss in the handset division. Jha said Motorola would focus on low-tier devices as well as mid-to-high tier devices based on Google's Android platform and Windows Mobile.

Yet Samsung passed Motorola in the third quarter [6] as the top handset maker in the United States for the first time. To top off a year of bad news for the handset division, the Motorola RAZR lost its spot [7] as the top-selling U.S. consumer handset in the quarter to the iPhone 3G, according to the NPD Group. The fact that the RAZR had been the top phone for 12 straight quarters and no other Motorola phone had been at the top laid bare Motorola's lack of innovation, especially in the post-iPhone era.