What's wrong with Moto?

The world’s second largest mobile manufacturer, Motorola, is losing ground in sales as well as brand recognition according to the analyst group Gartner.

In its worldwide mobile sales report for Q3 2006, released Wednesday, the analyst group said Moto had experienced “challenges in some regions”, losing its No.1 spot in Latin American and its No. 2 position in Western and Eastern Europe, the Middle East and Africa region.

Gartner says the Krzr – Motorola’s slimline fashion phone for consumers – is struggling to enjoy the same popularity as its predecessor, the Razr. The Motofone too has been delayed till next year, adding further to the company’s problems. According to Carolina Milanesi, principal analyst for Gartner, a year has been a long time for Moto.

“Motorola’s WCDMA portfolio needs to come up to scratch” says Milanesi, “its competitors are moving aggressively and winning, not only sales but also brand recognition.”

Milanesi points to 3’s announcement last week on its mobile broadband strategy. “Traditionally, 3 and Motorola have worked together but this time, 3 chose Sony Ericsson and Nokia.”

Motorola saw spectacular sales through 2005 on the back of its Razr V3 superhit. However, Milanesi thinks this may have actually hardened the problem: “It’s not easy is it when you come out with a product like the Razr. It’s hard to follow it.”

Moto’s Rokr E1 or “iTunes phone” was a flop, and Sony Ericsson’s Walkman models have beaten Motorola badly in the music market. Despite the raging vogue for them, customer satisfaction with the Razrs was dire. At one point it was the device most likely to be returned as faulty, and Moto had to admit that quality control left much to be desired.

One brand expert believes Moto’s decline has more to do with its competitors delivering quality kit, rather than its own failure to impress. “Sony Ericsson, for example, has brought out some great phones that just work and work well and it’s done a good job capitalising on Motorola’s weakness,” says Lars Hemming Jorgensen, creative director at Large Design in London. “Motorola has always had a poor reputation when it came to the user interface and when you compare it with say Apple, which has a great brand associated with innovation. you could conclude that Motorola was lucky with the Razr but had nothing to back it up.”

So has the Razr’s initial success cursed the Motorola brand with an expectancy it cannot satisfy? Martin Garner, telecoms analyst at Ovum believes there is an element of that, but warns not to write the firm off just yet. “I do think Motorola faces something of a dilemma,” says Gamer “on the one hand it needs to push the Razr for all its worth, and rightly so, but it does look like it is struggling to find a replacement.”

Garner insists Motorola still occupies an “enviable position” but points out that it does not have “a decent music phone, or a video phone. it’s really not covering all the form factors.”

Not covering those bases, it could be argued, is allowing the likes of Sony Ericsson to capitalise, something it has done a lot of in the last 12 months.

Motorola was not available for comment.