Faltering Motorola scales back in Asia

The lay-offs are part of a plan to slash around 3,000 jobs in a US$800 million cost-cutting programme that will see the firm’s Asian operations merge with those in Europe, the Middle East and Africa. The US-based mobile handset manufacturer, which holds eight per cent of the global market and just 3.5 per cent in Asia, according to Gartner, is reportedly scaling back its investment in several emerging Asian markets to focus on critical areas such as China and the Americas.

The brand, which only a few years ago was held up as a case study of successful marketing in Asia following the launch of its Motomusic platform, has seen its position in the region eroded. Observers point to an inability to move with the times, combined with an unclear proposition.

Having stormed the market four years ago with the Razr handset, the company has squandered its opportunity, according to Gregory Birge, managing director of F5 Digital Consulting.

“Everyone can be successful once,” says Birge, noting that the Razr followed a fall in market share from 35 to 12 per cent. “But the mark of a strong brand is the ability to sustain that success. The Razr was a fantastic innovation, but Motorola stopped investing in research and development.”

Shaun Rein, chief executive of CMR Group, points to a lack of distinction between Motorola’s high- and low-end handsets that has led to a dilution of the Razr’s brand value. This, along with a ‘one-size-fits-all’ regional marketing approach, has meant that the brand has failed to achieve an emotional connection with many potential consumers. Rein also believes that the company has made a mistake in focusing on the youth demographic, alienating a large segment of the market while failing to deliver the features required to capture the imagination of young consumers.

While the company’s efforts in the music space have been fruitful, particularly in China, where Motomusic remains the largest offering of its kind, the advent of the iPhone and of similar initiatives from competitors, such as Sony

Ericsson necessitates a stronger proposition. A Motorola insider admits that slow turnaround in new products compared with rivals such as Nokia has prevented the brand from building on its achievements.

“We have spread our R&D focus too broadly, and we haven’t got products onto the market quickly enough, especially in the high-end smartphone segment,” the source observes, stating that deals with inefficient equipment manufacturers - which are now coming to an end - have restricted the firm.

One thing is certain: the Razr’s initial design-based appeal has long faded. “It’s become less about aesthetics and more about what the handset can do,” says one agency source close to the brand. “Everything is moving from being a hardware industry to a software industry.”

According to Jimmy Poon, Asia-Pacific chairman of the Mobile Marketing Association, that puts the brand at a disadvantage. “Motorola has failed to come up with software that brings innovative functions to its devices. In Asia, this problem has been further amplified by a user base that has been very ready to adopt these new functions.”

The company is seeking to venture into Microsoft- and Android-based handsets as it limits its handsets to high-end smartphones. According to the Motorola insider, it is pinning its hopes on trends such as mobile social networking.

“All operators are grappling with how to gain more revenue from subscribers, so in that sense the strategy ticks the box,” says the source. “The question in some emerging markets in Asia is the affordability of those handsets.”

Motorola declined to comment. However, some believe there is still scope for a reversal of fortune. “If it keeps making the Razr, it’s dead,” says Marc Einstein, a senior analyst at Frost & Sullivan Asia-Pacific. “But if it comes up with a winning model, it’s back in the game.”