Stormy Weather: Can Motorola Ride Out the Economic Storm?

January 8, 2009

“Someone will eventually have to fall, and it won’t be pretty.” That is the prediction Phil Goldstein cautions in a recent post on Fierce Wireless. After a series of industry warnings from wireless companies; Nokia, Samsung, Palm, Research In Motion, and LG, of lower revenues and slower growth, Motorola stays mum. Pressed by the recession and weakening consumer demand in a highly competitive, fast-paced industry trending toward smart, thinner, more data-centric phones, perhaps Motorola’s silence is the loudest harbinger announcing its demise.

“Who will suffer? The most obvious answer is Motorola,” Goldstein furthers his supposition. Seen as “clinging to the RAZR as its beacon of hope”, Goldstein states plainly, in such a fast-moving market “it’s difficult to play catch-up.” Carriers will keep handing out subsidies to handset makers to keep prices down, but only the strongest will survive this teeth-knashing environment. The companies well positioned to ride the wave appear to be solid Nokia, Samsung and LG with their diverse portfolios, and RIM and Apple offering hot products consumers are craving.

Yes, consumers are dreamy-eyed with higher end products since the iPhone 3G, but those smartphones require data plans and with them a large monthly investment for already-stretched consumer budgets. $150 or more for that shiny upgrade then $80 or more per month for voice and data plans, more frugal customers wallets cautiously shut while handset producers keep pumping out smartphones. Those gleaming gadgets may sit on inventory shelves turning to dust collectors.

Motorola brought Sanjay Jha, from Qualcomm, onboard who has promised a refocus towards Windows Mobile and Android-based phones to turn around the handset division. With Motorola’s debt recently downgraded by Standard & Poor’s to little more than junk, expectation are dismal for the division’s survival, especially as Samsung and LG turn up the heat.

Posted By Russ · In Industry 

Got something to say?