IDC: Motorola Mobility should focus on the mass market, enterprise

Ramon Llamas IDCJanuary 4 marks the official separation of Motorola Mobility Holdings from Motorola, Inc. The separation of Motorola's Mobile Devices business unit has long been on the company's radar ever since co-CEO Sanjay Jha joined the company in 2008, with the thinking that the Mobile Devices business unit had enough legs to stand on its own. Furthermore, Jha has pointed out that the separation allows each company to grow according to their product lines. Motorola Mobility, by the very nature of its focus on consumer mobile devices and home businesses, anticipates faster growth than Motorola Solutions' focus on enterprise networks and communications equipment for public safety, retail, and industrial customers. The new company has many drivers in its favor, key among them its momentum in smartphones, strong brand, relationships with key suppliers and customers, and a healthy balance sheet.

Now that the separation is official, where does Motorola Mobility go from here?

Deeper and broader into smartphones. Motorola's success in 2010 was largely driven by its smartphone wins, and the company expects to have shipped between 12 to 14 million units for the year. This wouldn't put Motorola among the market leaders like Nokia, Research In Motion or Apple, but it does give the company a strong foundation from which to develop in the coming year. Also largely figuring into Motorola's success was the popularity of its Droid product line at Verizon Wireless, as well as acceptance of its MotoBLUR devices at multiple carriers in the United States and around the world.

The impending launch of the Apple iPhone at Verizon poses a significant challenge to Motorola Mobility, as many Verizon Wireless customers have longed for the iPhone ever since its debut in 2007 at AT&T. Some Motorola Droid users may switch over, but they will not be the only ones as some BlackBerry, HTC, LG, Palm and Samsung owners may do the same. What remains to be seen is how Verizon Wireless will promote its Droid lineup while supporting iPhone at the same time, and I doubt that Droid will be dropped altogether as the sub-brand has helped increase the number of Verizon Wireless's smartphone users. This means continued attention for Motorola Mobility. At the same time, the arrival of the iPhone at Verizon Wireless opens the door for more Motorola Mobility smartphones at AT&T, which will be looking for new ways to maintain its smartphone lustre.

Another opportunity for Motorola Mobility is the mass market. The company has already moved in this direction with entry level smartphones and feature phone substitutes, but these have met with mixed results. Some of these seemed to be experiments in design (Motorola Backflip, Charm, and Citrus all feature the touch-pad on the back), or a means to bring MotoBLUR to the masses quickly. But even the mass-market user wants a premium experience found on high-end devices. To do this, Motorola Mobility must develop a smartphone that isn't a dumbed-down smartphone or a feature phone on steroids. There is space to be defined and claimed, but it cannot be a duplication from what has already been offered to the market.

Selling smartphones to the enterprise. Towards the end of 2010, Motorola introduced the Droid Pro, an Android-powered smartphone targeting the enterprise user. This pointed a new, but not altogether unexpected, direction for Motorola's smartphones, as most of its devices ended up in consumers' hands. While bringing a device to enterprise users is an important first step, there still remains a number of questions to answer before being accepted as a so-called enterprise-grade device. Paramount to the smartphone is security: No company wants a smartphone that would put it at risk, and security features like remote wipe, complex passwords, and VPN access become critical as well as mobile device management. With the inclusion of Android 2.2 (Froyo) on the Droid Pro, most of these concerns are addressed as check-box items. Still, Motorola must highlight how its solutions either meet or exceed a company's IT expectations, and how it is differentiated against other company's handsets as being worthy, especially as Android is still a newcomer within the enterprise.

What happens after iDEN shut down in 2013? Sprint announced plans to shut down iDEN in 2013, but will extend Motorola's support to the iDEN network (from Motorola Solutions, not Motorola Mobility) until then. iDEN handsets have been a steady contributor to Motorola, both in terms of volumes and revenue. While it is tempting to say that this will leave a gaping hole in Motorola's product portfolio, it also represents an opportunity to bring iDEN customers an alternative. Sprint had worked with several other handset vendors to bring QChat devices onto the market (Motorola among them), but by late 2009 it issued a statement that no new QChat devices were on the product development roadmap. This is presents an opportunity for Motorola to bring a push-to-talk solution not just for Sprint, but for each of the major carriers in the United States.

Above all, differentiate. As much as Motorola succeeded in 2010 in re-establishing itself as a leader in the smartphone business, it must, above all, continue to differentiate itself from the competition. It can point out its key attributes of hardware design, software experience, and social networking capabilities, but it is not the only company who can claim those descriptors. 1 GHz processors have become the expectation, and not the exception. The same can be said for four inch capacitive touchscreens. Meanwhile, practically every smartphone has made social networking the cornerstone of their experience, with mobile browsing and mobile applications following closely behind. The challenges that face Motorola in the smartphone business are the same ones facing all other companies. What remains to be seen is how Motorola sets itself apart from an increasingly crowded market.

Welcome to your brave new world, Motorola.

Ramon Llamas is a senior research analyst with IDC's Mobile Devices Technology and Trends team. In his role, Llamas tracks the quarterly results of the leading and emerging mobile device vendors, and uses the data to forecast the short-term and long-term direction of the mobile device market, and how it affects handset vendors, carriers and customers. He recently released his worldwide mobile phone and smartphone 2010 - 2014 forecasts, as well as a worldwide forecast of the mobile phone touchscreen market. In addition to being featured in FierceWireless, Llamas has been featured on Bloomberg Radio, National Public Radio, and quoted in Investor's Business Daily, the New York Times, and the Wall Street Journal. Llamas can be reached at [email protected].