Motorola feels pressure from Verizon iPhone

Motorola's executives say the company is already feeling the effects of the Verizon Wireless iPhone.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
2 min read

Motorola is bracing itself for a slowdown in smartphone sales in the first quarter as the Apple iPhone goes to Verizon Wireless.

During the fourth-quarter conference call with analysts and investors on Wednesday, Sanjay Jha, the CEO of Motorola Mobility, said the company saw a slowdown in sales during the fourth quarter due to anticipation of the iPhone at Verizon. He said he expects sales to be slightly down as the company will now compete head to head with the iPhone at its strongest carrier partner, Verizon Wireless.

"Since the announcement of the iPhone, we have seen a little slow down in our sell through of devices at Verizon," Jha said. "There was anticipation of devices coming to Verizon even prior the announcement of the iPhone."

In addition to the iPhone, which goes on sale at Verizon starting February 10, Motorola is also launching new Google Android smartphones on Verizon's 4G LTE network. For this reason, Jha said the company saw a slight slowdown in sales and expects some pressure in sales in the first quarter.

During the fourth quarter, Motorola said it shipped 4.9 million smartphones. This was slightly lower than the 5.2 million smartphones that analysts had expected, Reuters said.

Motorola said in a press release that it expects a net loss of $26 million to $62 million in the first quarter of 2011.

Still, Jha said the company's relationship with Verizon Wireless is strong. Verizon helped revive the company's ailing mobile handset market over the past year by making Motorola's Droid smartphones its flagship devices to combat the iPhone, which has been exclusively sold by AT&T in the U.S. since 2007.

Verizon has spent more money marketing the Motorola Droid products than any other line of smartphones in its portfolio. Jha would not comment specifically about whether Verizon would limit its spending in the future now that it has the iPhone. He said the company will still have strong support from Verizon as it introduces new smartphones for the carrier's 4G LTE network, such as the Motorola Bionic, which is set to debut toward the end of the first quarter.

He also pointed out the fact that Motorola is working with other carriers, such as AT&T, to provide Android smartphones. And it is getting ready to launch its first tablet PC called Xoom in February.

As for the Verizon iPhone, Jha also said that the iconic device could help get customers in the door at Verizon retail stores. Which phone they leave with may yet be determined. But Jha hopes it's a Motorola Droid instead of the iPhone.

"When customers go into the Verizon stores now, they'll be offered choices," he said. "And time will tell what percentage of sales goes to which brand."