Resurrection via smartphone

After several years struggling to return to relevance in the highly competitive mobile handset market, Motorola Mobility at last appears to be finding its feet again, and producing compelling devices. The company’s market share of global handset shipments has fallen drastically in preceding years, though with Android identified as its operating system of choice, and smartphones as its market segment of focus, the Chicago-based manufacturer believes it has the right strategy in place to resurrect its fortunes

Hafez says Motorola Mobility always maintained its service provider partnerships, and it is encouraging how positively the market is responding to its new devices 

Motorola Mobility started trading on the New York Stock Exchange as an independent entity on January 4, 2011. It heralds the end of a tumultuous period in which the devices business within the larger Motorola Inc. was in very real peril and in need of turnaround. The past 18-24 months have seen the devices business of Motorola define its updated strategy with a key focus on being the leading smartphone manufacturer, powered by Google’s Android operating system.

The appointment of Sanjay Jha as Motorola co-CEO alongside Greg Brown in August 2008 marked the beginning of the reinvention of the devices business, and if Q410 financial results are anything to go by, the standalone handset manufacturer is along the right path.

Motorola Mobility reported a 21 per cent rise in its fourth-quarter revenues to US$3.4 billion. Net profits were US$80 million, compared to a loss of US$204 million in the fourth quarter of 2009.

For the full year, 2010 net revenues were US$11.5 billion, up four per cent compared to 2009, while the net loss was reduced to US$86 million from US$1.34 billion in 2009.

The company generated positive operating cash flow of US$225 million and US$606 million in the quarter and full year, respectively. As planned, subsequent to the end of the quarter, the company received US$3.2 billion in cash related to its separation from Motorola.

“The improvement in our financial results last year, including profitability in the fourth quarter, is indicative of the progress we have made in delivering innovative smartphones and improving the Mobile Devices business,” said Sanjay Jha, chairman and CEO of Motorola Mobility. “With the global opportunities ahead, along with our diversified portfolio, our brand, and our people, we are well positioned to grow, and further improve our financial results in 2011.”

The company shipped 4.9 million and 13.7 million smartphones in the quarter and full year 2010, respectively, compared to two million in the fourth quarter 2009. Motorola shipped total handsets (including smartphones) of 11.3 million and 37.3 million in the quarter and full year 2010, respectively.

“2010 was a good year for us,” says Raed Hafez, GM for Motorola Mobility Middle East & Africa. “We launched over 20 different smartphones and are enjoying a positive momentum.”

The Motorola Xoom tablet

Looking to the year ahead, Hafez says Motorola Mobility in the MEA region shall be looking to repeat the same success story that has been enjoyed globally. “We have chosen the right platform with Android, and we are in the process of establishing ourselves as the best smartphone provider in the world,” Hafez says.

The growing adoption rate of smartphones in the MEA is an opportunity for growth, with consumers in particular driving demand for such devices. Hafez thus believes the enablers for the manufacturer’s success are present and that Motorola is recapturing its glory days of creative designing.

“The Motorola Flipout is a device that is targeted at the female segment of the market as a fashion statement,” Hafez describes. “The Motorola Defy is water and dust resistant so it is especially ruggedised,” he adds.

During the early stages of 2011 Motorola Mobility shall be pushing three devices in particular in the MEA market. The Xoom is a tablet device with a super-fast dual-core processor and Android 3.0 (Honeycomb) operating system – the powerful Google software developed specifically for tablets. The Motorola Flipout and Defy are smartphones the manufacturer believes will also have Motorola Mobility engaging in the market in a significant manner.

“Something I would like to emphasise is the service side of the Motorola Mobility offering,” says Hafez. “We are actively helping service providers to increase the data consumption of their customers in a way in which the service provider also benefits.”

For the meanwhile Hafez says Motorola Mobility is more concerned about getting the user experience of its devices right, and less so with what market share that relates to, believing that a rebound in market share will be a direct result of user-friendly, attractive, well-assembled devices.

The strength of the Android platform is another intrinsic advantage Motorola Mobility sees, given the mobile operating system saw a device activation rate of around 1.5 million a week in the latter part of 2010.