Motorola sees its edge as razor-thin

Company's surprise recovery last year has it hungering for bigger sales and higher profits, its CEO says.

3 min read
Motorola's surprise recovery last year has the company hungering for bigger sales and higher profits, its chief executive says.

The communications technology company, which increased sales by 35 percent last year and nearly doubled net profit, earlier this week announced a range of new mobile phones with four-letter names, such as the Razr black, the SLVR and the PEBL.

A black version of the ultra-thin RAZR, nicknamed BLZR, was only meant to be a special product for Oscar nominees at the awards ceremony.

But when Chief Executive Ed Zander took one home with him and showed it to friends and customers, the reactions were so positive the company decided to bring it to a wider market.

The original Razr was targeted as a high-scale product for fashion consciousness and business users, but it soon started selling outside that group, Zander said Wednesday in an interview at the 3GSM wireless trade show in Cannes, France.

"RAZR is a 'wow' product. Look what this product has done for us. We sold less than a million RAZRs in the fourth quarter, on a total of 32 million phones. But this product has driven a lot of people to the Motorola brand," Zander said.

Motorola, based in the Chicago suburb of Schaumburg, Ill., will introduce more ultra-thin phones in coming months, and Zander has been showing customers in Cannes a similarly super-slim version of the MPX model that runs on Microsoft's Windows operating system.

"You'll see this (product) in the second half of the year," Zander said.

Analysts who had seen the prototype were surprised. "I didn't know you could make them this thin," said one London-based financial analyst at a large investment bank.

The new designs could help Motorola stand out from the rest.

"I want us to return to the days of Startec and what we kind of lost. I want us to be the coolest, hippest generation of technology products," Zander said, referring to the 1990s when its Startec handsets earned it a reputation as the "King of Thin" and the company was the global market leader in handsets.

Motorola now needs to prove it can consistently deliver top products, although it recognizes it won't always win, he said.

"Great brands get built over time. From time to time we'll have the advantage, but (even) Nike doesn't have the best sneakers all the time," Zander said.

Another new model, the yet-to-be-unveiled ROKR, will be Motorola's first phone that is fully compatible with Apple Computer's iTunes software, which will be Motorola's default music player on handsets.

The phone will be Motorola's way of tapping into the digital music market that has exploded over recent years. Handset competitors Nokia and Sony Ericsson earlier this week announced their own deals with online music services Sony Connect and Loudeye.

Unlike Apple, which allows Motorola users to carry only a limited number of songs on their mobile phones in order to protect its popular iPod portable music player business, the rivals will allow consumers to carry as much music as they can store on their phone's memory cards. There are already tiny memory cards on the market with capacity of 1GB that can store hundreds of songs.

None of these initiatives are available to consumers yet, and meanwhile iTunes store is the most popular music store on the Internet and its number of customers is growing.

"We think we have time, plus we have the market leader," Zander said, referring to iTunes.

Apple was already discussing with mobile carriers how to let mobile phone users download tracks over the air when the newly announced rivals were just getting started.

Zander was sure Motorola would not feel complacent after its first strong year following many years of problems and losses.

"We had a good year. We tasted success, but there's no sense that we've accomplished something. The competition is ferocious and they want a piece of us," Zander said.

"We need to do this over and over again."