May 15, 2007 3:16 PM PDT

Is Motorola's cell phone revamp enough?

NEW YORK-- Motorola is adding considerable new features to its slick cell phone designs. But critics wonder whether the new phone capabilities will be enough to light a fire under the increasingly troubled consumer electronics giant.

Motorola, the second-largest handset maker in the world behind Nokia, has been struggling to regain its footing in an increasingly competitive market for the past several quarters. For the first quarter of 2007, the company reported a net loss as prices on phones continued to plunge.

Chief Executive Officer Ed Zander, who ended a bitter proxy fight with billionaire shareholder activist Carl Icahn last week, was on hand at an event here Tuesday to show off the company's five new handsets. Zander has been promising a new set of products that will help the company regain profitability.

Motorola's latest products, which will all be available this summer, clearly take the company in a new direction. Instead of concentrating solely on style and design, it has added more functionality such as 3G, or third-generation, network support and multimedia features.

But critics say Motorola's new products are nothing more than souped-up versions of devices the company has already been selling. Four of the phones highlighted Tuesday, in fact, were new versions of existing products.

New Moto phones

"While we are encouraged with the company having introduced 3G, feature-intensive devices, we question the ultimate success of these devices given the lack of traction for the company's Krzr phone," Bill Choi, a senior analyst at Jefferies, said in a research note published Tuesday.

As expected, Motorola introduced the follow-up to the popular ultrathin Razr with an even thinner phone called the Razr2. The Razr has been one of the best-selling cell phones on the market since it was introduced in 2004. Motorola expects to sell its 100 millionth Razr in the next few weeks, Zander said.

While the Razr franchise has helped Motorola increase its market share over the past couple of years, the company's executives have been criticized for commoditizing the product by allowing mobile operators to slash prices on the phone to entice subscribers to sign up for service. Today the Razr is available from every major carrier in the U.S.

But Zander clearly believes the Razr brand is strong enough to continue anchoring the company's product line.

"The Razr is more than a product, it's a brand," Zander told reporters and analysts at Tuesday's event. "When I reach for a tissue, I grab a Kleenex. When I order a soda, I say I want a Coke. And even when I talk about an MP3, I call it an iPod. The Razr is also a brand, and we will market that for years to come."

"Going forward it will be far less about one particular product. Instead it will be a suite of products that defines our brand."
--Jim Wick, Consumer Experience Design group, Motorola

Zander said the next-generation Razr, the Razr2, is slimmer, sleeker, stronger, smarter and yet simpler and more stylish than its predecessor. The device comes in two versions: the V9 for GSM networks and the V9m for CDMA versions.

While Motorola improved the Razr's design by making it even slimmer and also made it more rugged, the real difference between the old and new Razr is on the inside. The new phone supports a full HTML browser that enables Web surfing even on non-WAP enabled sites; a faster 500MHz processor and USB 2.0 support for faster music downloads and PC syncing; video conferencing capability; and new voice technology called "Crystal Talk" that will adjust the volume of the voice call based on ambient noise. The Razr2 is expected to be available on all major U.S. operator networks later this summer.

While the Raz2 packs an impressive array of functionality into an improved design, analysts are skeptical that it will have the same impact on the company as the original Razr.

"Motorola sorely needs a hit or several iterations of success to turn around its mobile-handset division, which despite strong unit growth, is suffering from a lack of profitability," Mark Sue, an analyst for RBC Capital Markets, wrote in a research note to investors. "The reception for the Razr2 may be decent since a market exists for a sequel. (But) it may not be enough to enable significant market share gains."

Motorola executives also emphasized the company's breadth of devices. They seemed to recognize that relying solely on one product, such as the Razr, is dangerous.

"It's important to remember that Motorola invented thin phones," said Jim Wick, vice president and director of the Consumer Experience Design group at Motorola. "And we will continue to do thin. (But) going forward it will be far less about one particular product. Instead it will be a suite of products that defines our brand."

CONTINUED: Competition heating up…
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13 comments

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Does the interface still stink?
I found that Motorola's cell-phone interface was horrible to use
- five clicks to get to the alarm clock, horrible key feedback, etc.

If it's not usable, it's no use.

I enjoy using my Sony-Ericsson T616 far more than I ever did
the RAZR that I bought as an upgrade - and I went back to the
T616 after six months with the RAZR because I couldn't stand to
use the thing anymore, especially with the persistent backlight
buzz the RAZR has. Most people I know with RAZRs feel the
same way.

If the RAZR2 and other 'new' phones are simply repackaged
versions of the same bad software, I know I won't even give
them a second glance.
Posted by Hep Cat (440 comments )
Reply Link Flag
New interface it seems...
From the photos and the article, it looks like Motorola is revamping
the interface to a Linux based one. I agree that their old interface
was terrible. This one looks promising.
Posted by fullmetal pharmacist (44 comments )
Link Flag
Yeah...
Yeah, in the past 10 or so years, I've had:
Nokia 100
Nokia 6000 series
Motorola Startac
Kyocera 3100 series
LG VX300 series
Motorola RAZR

(wow... that's kinda sad when you look at it.)

The interfaces have routinely improved, but the RAZR felt nostalgia, some bad holdovers carried forward from the Startac.

One can only hope that everyone in the interface department had all their Moto products confiscated and each Monday were handed a different competitor's handset.

Otherwise, any improvements will probably be mostly a fresh coat of watered-down whitewash applied to rickety boards nailed (with half the nails missing) to brand new posts in fresh concrete.

I bet Motorola hardware engineers cry every time they release a product to the software/interface team.
Posted by TV James (680 comments )
Link Flag
Agreed
I agree totally. The Sony Ericson interface is much much better and loads more intuitive than the motorola interface which plagues all it's phones.
Posted by Stormspace (1028 comments )
Link Flag
Agreed
I agree totally. The Sony Ericson interface is much much better and loads more intuitive than the motorola interface which plagues all it's phones.
Posted by Stormspace (1028 comments )
Link Flag
Software is the key
Motorola might have beautiful hardware; I have a RAZR. But the
software shows lack of effort; frankly, it stinks. Motorola and the
rest should be taking lessons from Apple's iPhone. Motorola makes
elegance, but Apple makes elegance and ease of use. The cell
phone bar was raised to new heights at the end of June. Now let's
see if Motorola, and the rest, can clear it.
Posted by appledogx--2008 (92 comments )
Link Flag
how about a StarTac 2?
Motorola should seriously consider a "Startac 2".

Talk to many cell phone power-users, and they will say they regret the day they were forced to retire their old Startac. (I had mine until I left Verizon 2 years ago)

Comparing it to any phone I have seen prior or since, no phone came close in reception, interface, or durability.
Posted by mvl_groups_user (24 comments )
Reply Link Flag
StarTac2
You're absolutely correct. The StarTac was a great phone. You
could actually read both the LCD screen and keypad in bright
daylight. Doing either is impossible with the Razr. I checked with
Verizon. I can replace my Razr on 12/22/07 without penalty. If
Verizon doesn't offer a StarTac-type phone, I'll change service to a
provider that does. I suspect a lot of users want a simple cellphone.
I'd even sacrifice Bluetooth.
Posted by jimdext (2 comments )
Link Flag
i think moto's battery is a big problem
i think moto's battery is a big problem
____________________________________
<a class="jive-link-external" href="http://www.vdownload.org/" target="_newWindow">http://www.vdownload.org/</a>
Posted by Mich4elm4n (1 comment )
Reply Link Flag
Big branding mistake
The Razr name (and other similar names/brands of Motorola phone) have a HUGE problem: they only work (phonetically) in English speaking markets...!

It is typical American corporate arrogance, to think that the world IS the USA. It is - until they want to sell their products in other markets.

On the other hand, "iPod" is an excellent example of a brand that works in every market, regardless of the language spoken.
Posted by aemarques (162 comments )
Reply Link Flag
Who cares?
They can always call it something else in another country.

It's not like "Pod" is a universal term or the use of "i" to denote hi-teck-interwebby-connectivity. It became international by being a compelling, innovative must-have product.

There are plenty of examples even within this country where different names are used in different parts of the country for the same thing... Safeway/QFC/Vons/Pavillons, Kroger/Ralphs, Sears/KMart(ha), Dryer's/Edy's Ice Cream, etc.

We should all stick to arabic numerals for all products. Then they're universal, except in much of the arab world where hindi numerals are preferred.

They've got different marketing teams for different parts of the world.

Besides, the RAZR and most phones sold in the U.S. aren't sold elsewhere because they're technologically and featurally(if that's a word) inferior to what you can get elsewhere.
Posted by TV James (680 comments )
Link Flag
agreed
that's an impossible brand to market in non english speaking countries (that's where most of the world phones are sold)
Posted by dcardozo (29 comments )
Reply Link Flag
 

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