Hate To Say I Told You So

I haven’t said a whole lot about Motorola’s (mis)fortunes lately, apart from a post in May that echoed what I’d been saying for almost two years — that the company needed to move on from the RAZR and come up with something to replace it. But this week, the company said that it would miss its sales targets for the quarter, lose money for the second quarter in a row, and that its handset business wouldn’t be profitable this year. The dip in sales also means that Samsung has passed it as the number two handset vendor.

CEO Ed Zander (or ZNDR) is now on the chopping block, and it’s hard to see how he’ll be able to keep his job. He fended off activist investor Carl Icahn, but this latest dismal announcement may simply be too much to bear. It’s never a good sign when your company’s stock price gets held up by optimism that you’ll soon lose your job. I’ve never been a huge Zander fan, since I first heard him speak at Motorola’s press event at 3GSM in 2004. I found his vision for the company trite and tired as he trotted out the “seamless mobility” concept the company’s been talking about for ages. Perhaps Zander and the rest of the company have been too enamored with this vision of the future (which never seems to get any closer to reality) and they overlooked the short term by putting too much faith in the RAZR and its derivatives for far too long.

Things aren’t going to improve very quickly for the company, either, with most financial analysts seeing no change in its fortunes for the next 18 to 24 months, at the least. Zander has also put a new exec in charge of the handset business, and the fact that he was the company’s head of supply-chain operations makes it appear that the unit’s focus will now be on driving costs down rather than developing a portfolio of outstanding products. The problems run deep: as Techype notes, it’s no coincidence that Moto’s hurting while Sony Ericsson, which is the anti-Moto in so many ways, is thriving.

What makes the Motorola story even more compelling is that it’s got a history for this sort of thing. The story of its underestimation of the industry’s shift from analog to digital technology — which led to its ruin and the rise of Nokia — is one of the industry’s legendary tales, while the company’s history over the past decade or so has been a real roller-coaster. I wondered after 3GSM in 2006 if the RAZR was Motorola’s modern equivalent of the StarTAC, meaning a huge, hit handset that the company just couldn’t follow up. I’m sad to say that it looks like I was right.

Can Motorola turn things around? Absolutely — the Z8 is proof that somewhere within the company, somebody’s got an idea of how to make a hot handset. But I don’t think that turnaround can happen with the current leadership, nor do I think that the current leadership will be given the opportunity to do so.

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