Very good posting, Carlo (as per usual) and good solid analysis of the troubles of Motorola today.

I would suggest that the near future is much more bleak.

In its home market, USA, which is the only regional market where Motorola beats Nokia, it has serious problems now directly and indirectly because of the iPhone.

First, the iPhone steals directly the thunder at the top end. Secondly, the iPhone raises the bar for high-end phones – which opens the door for Nokia’s top end of N-Series and top end of E-Series. That in turn will help boost the Nokia brand (only regional market where Nokia is number 3).

Thirdly, the iPhone will also help LG, ie through the Prada phone now, and certainly soon-to-come cheaper iPhone clones in the LG Prada fashion.

The profits tend to be made at the top end models. This three-pronged attack is severely hitting the mid to top end of Motorola’s USA market, right now.

Rest of the world? Moto has been pushing low-cost phones for India, China, Africa etc, and that is a strategy for volume but not margin.

Now with this new appointment of the top guy at handsets to focus on the supply chain rather than innovation, pushes Moto’s attention more on volume, and almost gifts the mid and top end of the market to Nokia, Samsung, SonyEricsson and LG. One would think that with the buzz around the iPhone, Moto would attempt to re-vitalize its lead at the top end of the most desirable phones.

The two big problems Moto has in fighting the price wars at the low end of the market, in Africa, Latin America, India, China, parts of Asia – is that LG is very strong there and can capitalize on much lower costs of design and manufacturing in South Korea, and Nokia has about twice the global volume and plenty of handset platforms that are optimized for this low end market penetration.

Near future looks even more bleak than the near past…

My two cents

Tomi T Ahonen
http://www.tomiahonen.com

Now we have seen the similar situation again. Motorola fell out of favor. iPhone is the talk of the town, boosting Apple stock sky high.

But let’s be rational. Motorola still has a great brand in Asia, a quite good network of distribution and operator relationship. It has suffered before and will bounce back. Apple, on the other hand, is entirely untested in this industry, despite the initial success with iPhone in North America market.