Analysts contend Motorola Xoom, Atrix sales sluggish

Analysts are casting doubt on Motorola Mobility's (NYSE:MMI) ability to get customers to fork over cash for its new Xoom tablet and Atrix smartphone, arguing the company faces intense competition in both device categories.

Motorola Xoom and Motorola AtrixThe skepticism started Friday with RBC Capital analyst Mark Sue cutting his target for Motorola, noting disappointing Xoom sales. "The amount of competitive new launches near-term is making it a little bit tougher for Motorola," Sue wrote in a research note. Sue said the Xoom's pricing, Apple's (NASDAQ:AAPL) iPad 2 and a lack of differentiation in software may be hindering the Xoom. The Xoom is $800 unsubsidized and $600 with a two-year contract from Verizon Wireless (NYSE:VZ). A Wi-Fi-only version of the device goes for $600.

AT&T Mobility (NYSE:T) has been heavily promoting the Atrix, which sells for $199 with a two-year contract. The Atrix also can be bundled with Motorola's laptop dock for a promotional price of $499.99 with a two-year service contract and $100 mail-in-rebate, but must be combined with AT&T's Data Pro smartphone data plan and tethering add-on (the Data Pro plan is $25 for 2 GB and the tethering add-on provides an additional 2 GB for $20). Sue said sales of HTC's $99 Inspire, also at AT&T, are crimping the Atrix.

Separately, Pacific Crest analyst James Faucette also questioned Motorola's prospects; he cut his Xoom shipments forecast by 25 percent to 300,000 units in the current quarter and said sales were "slow." He also said Atrix sales were being hurt by the $49 iPhone 3GS and the Inspire.

A Motorola spokeswoman declined to comment.

When Motorola released its first-quarter outlook in January--a net loss of $26 million to $62 million and consolidated operating earnings of around breakeven--investors got spooked. However, the company remains bullish on its dock strategy for smartphones and its long-term prospects.

"It's moving so fast right now that we really are providing a solution that is still at 1.0 implementation but is going to be more fitting to how consumers or prosumers are evolving their way of doing computing," Alain Mutricy, Motorola's senior vice president for portfolio and device product management, said in a recent interview with FierceWireless. "So, it's really mobile computing, it's not based on a laptop comparison. It's based on where we think the industry is heading and where we think the consumer is heading." 

For more:
- see this Forbes article
- see this Barron's blog post
- see this Technologizer article

Related Articles:
Motorola's Mutricy on the future of Webtop and MotoBLUR
Motorola: We're already seeing 'slowdown' in sales due to Verizon iPhone
Motorola unveils Xoom, Android 'Honeycomb' tablet
Motorola will release more tablets, bring webtop app to high-end smartphones
Motorola leaned on Verizon for 28% of revenue in 2010
AT&T crowns Motorola Atrix as lead Verizon iPhone challenger

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