Motorola CEO Ed Zander proclaimed 2005 the year of the RAZR, and it looks like the vendor will try to make 2006 the year of the RAZR, too. Motorola grew its handset business faster than most of its competitors last year, and it has the ultra-cool, ultra-thin, metallic RAZR to thank for it. Every newspaper ad I saw this weekend for cell phones featured the RAZR--for T-Mobile, Verizon and Cingular--and Verizon advertised a pink RAZR just in time for Valentine's Day. I'm assuming we'll see all sorts of psychedelic RAZRs this year with slightly more advanced features as Motorola tries to push its success as far as it can.
But this is eerily reminiscent of Motorola's success with the StarTac phone in the late 1990s. The first clam-shell wearable phone the industry had ever seen reinvigorated Motorola's sales after it lost market share to Nokia when it failed to transition from analog to digital technology fast enough. However, Motorola rode the StarTac train too long as competitors came out with the same design and began hitting the market with more feature-rich phones. By 2003, Motorola was missing in action again when it came to competing with rivals with features that were resonating with customers, such as phones with embedded cameras.
In 2005, it was the RAZR phone that put the vendor on top once again. According to Strategy Analytics, RAZRs comprised one-third of Motorola's shipments in the fourth quarter, with Motorola shipping about 15 million RAZRs during 2005. "Motorola is at risk of becoming a one-trick pony," warned Strategy Analytics. Already, we are seeing competitors coming out with similar products. Sprint Nextel says it won't even sell the RAZR, opting to sell rival Samsung's A900, nicknamed the Blade, that features a thin clamshell design similar to the RAZR. Sprint Nextel COO Len Lauer has said he thinks the Blade is a better device.
Indeed, the RAZR, like the StarTac, is revolutionizing the design of handsets--making them a huge must-have fashion accessory. But Motorola once again risks missing out on the next technology evolution if it focuses too long on last year's model. And investors appear to be waiting for the other shoe to drop, hoping Motorola doesn't fall into its old habits. We might get a sense of where Motorola is by the middle of this year when the vendor is expected to introduce a host of new technologically advanced products such as the E815, which plays TV-quality video, and the MPX smart phone. - Lynnette
Correction: Last week FierceWireless reported in two articles that the value of Vodafone's stake in Verizon Wireless has risen by $10 million per year in the last two years. The correct figure is $10 billion.