Motorola errs, Samsung scores
S. Korean company pulls ahead as maker of Razr phone falters
LONDON: None of its phones have triggered the excitement of Apple's iPhone or the mass buying of Motorola's Razr, yet South Korea's Samsung Electronics over the summer quietly became the world's No. 2 seller of mobile phones, behind Nokia Corp.
The wireless industry, momentarily thrown into a tizzy by the arrival of the iPhone, paid little attention as the Asian titan surpassed Motorola in terms of market share.
Yet the move invites an important question: Was it a fluke, or does Samsung have what it takes to hold off a resurgent Motorola in the longer term?
The Schaumburg, Ill., vendor's woes in recent quarters from the lack of a convincing successor to the Razr to a somewhat haphazard strategy and inventory gluts no doubt played an important part in Samsung's surge ahead.
Yet Samsung's ascent can't be dismissed solely as the result of its nearest competitor's mistakes. Industry observers say it might be sowing the seeds of a longer-lived domination.
Samsung, which has built a reputation for churning out attractive phones quickly but is sometimes criticized for copying its competitors' designs, is skillfully tweaking its strategy.
In the last two quarters, it has departed slightly from an exclusive focus on the high end to launch less sophisticated models aimed at helping it gain share in the mid-market, where its ever-thinner phones hold great appeal. It's also looking to new territory, with plans to expand into the entry-level segment.
''Samsung is marketing and pricing aggressively to expand its entry-tier product line and to take share from a downbeat Motorola in mid- and higher-tiers,'' said Neil Mawston, associate director in the global wireless practice of research firm Strategy Analytics.
Those tactics are clearly paying off. It had 15 percent of the global market in the second quarter compared to 14 percent for Motorola and 39 percent for Nokia, according to Strategy Analytics.
Despite two restructuring initiatives announced so far this year and a management shakeup within the mobile-devices unit at Motorola, industry observers don't expect a recovery anytime soon.
''I don't see their situation improving for the next two quarters at least,'' said Shaleindra Pandey, a telecom analyst at ABI Research. ''They're going to need to come up with something better than yet another Razr.''
Motorola's shares have fallen 29 percent during the past 12 months. Samsung shares have lost 13 percent during the same period.
Geoff Blaber, a senior analyst at research firm CCS Insight, explained that Motorola's product road map in the midrange and high-end segments was substantially affected by software problems when the company moved from a proprietary platform to a Java Linux system. As a result, the vendor wasn't able to develop new handsets as quickly as its competitors.
For now, there seems to be little enthusiasm for Motorola's latest products.
Initial sales of the Rizr Z8, a new high-end, ''kick-slider'' device, appear to have gotten off to a slow start, Oppenheimer analysts told clients at the end of July.
Motorola management itself concedes the company will need more than a new best-seller to turn its fortunes around. In a recent investor presentation, Chief Financial Officer Tom Meredith said that while a new hit product would be great, it's not absolutely necessary for the company to return to profitability or regain market share. What the group really needs, he said is to be ''boringly consistent'' and improve its cost structure.
But despite all its recent success, Samsung is not without weaknesses.
The most blatant one until recently, according to some industry observers, has been a lack of true design innovation, with the company relying instead on its ability to quickly imitate what worked for its competitors. For instance, shortly after Nokia launched its L'Amour collection of phones in soft colors targeted at women, Samsung debuted its La Fleur range, using similar hues and flowery prints.
Blaber, however, pointed out that Samsung's designs are becoming more and more revolutionary with models such as the ''flipper'' F300, with one side for playing music and videos and the other featuring a regular phone and keypad.
source
LONDON: None of its phones have triggered the excitement of Apple's iPhone or the mass buying of Motorola's Razr, yet South Korea's Samsung Electronics over the summer quietly became the world's No. 2 seller of mobile phones, behind Nokia Corp.
The wireless industry, momentarily thrown into a tizzy by the arrival of the iPhone, paid little attention as the Asian titan surpassed Motorola in terms of market share.
Yet the move invites an important question: Was it a fluke, or does Samsung have what it takes to hold off a resurgent Motorola in the longer term?
The Schaumburg, Ill., vendor's woes in recent quarters from the lack of a convincing successor to the Razr to a somewhat haphazard strategy and inventory gluts no doubt played an important part in Samsung's surge ahead.
Yet Samsung's ascent can't be dismissed solely as the result of its nearest competitor's mistakes. Industry observers say it might be sowing the seeds of a longer-lived domination.
Samsung, which has built a reputation for churning out attractive phones quickly but is sometimes criticized for copying its competitors' designs, is skillfully tweaking its strategy.
In the last two quarters, it has departed slightly from an exclusive focus on the high end to launch less sophisticated models aimed at helping it gain share in the mid-market, where its ever-thinner phones hold great appeal. It's also looking to new territory, with plans to expand into the entry-level segment.
''Samsung is marketing and pricing aggressively to expand its entry-tier product line and to take share from a downbeat Motorola in mid- and higher-tiers,'' said Neil Mawston, associate director in the global wireless practice of research firm Strategy Analytics.
Those tactics are clearly paying off. It had 15 percent of the global market in the second quarter compared to 14 percent for Motorola and 39 percent for Nokia, according to Strategy Analytics.
Despite two restructuring initiatives announced so far this year and a management shakeup within the mobile-devices unit at Motorola, industry observers don't expect a recovery anytime soon.
''I don't see their situation improving for the next two quarters at least,'' said Shaleindra Pandey, a telecom analyst at ABI Research. ''They're going to need to come up with something better than yet another Razr.''
Motorola's shares have fallen 29 percent during the past 12 months. Samsung shares have lost 13 percent during the same period.
Geoff Blaber, a senior analyst at research firm CCS Insight, explained that Motorola's product road map in the midrange and high-end segments was substantially affected by software problems when the company moved from a proprietary platform to a Java Linux system. As a result, the vendor wasn't able to develop new handsets as quickly as its competitors.
For now, there seems to be little enthusiasm for Motorola's latest products.
Initial sales of the Rizr Z8, a new high-end, ''kick-slider'' device, appear to have gotten off to a slow start, Oppenheimer analysts told clients at the end of July.
Motorola management itself concedes the company will need more than a new best-seller to turn its fortunes around. In a recent investor presentation, Chief Financial Officer Tom Meredith said that while a new hit product would be great, it's not absolutely necessary for the company to return to profitability or regain market share. What the group really needs, he said is to be ''boringly consistent'' and improve its cost structure.
But despite all its recent success, Samsung is not without weaknesses.
The most blatant one until recently, according to some industry observers, has been a lack of true design innovation, with the company relying instead on its ability to quickly imitate what worked for its competitors. For instance, shortly after Nokia launched its L'Amour collection of phones in soft colors targeted at women, Samsung debuted its La Fleur range, using similar hues and flowery prints.
Blaber, however, pointed out that Samsung's designs are becoming more and more revolutionary with models such as the ''flipper'' F300, with one side for playing music and videos and the other featuring a regular phone and keypad.
source
Very interesting. I have always been a Motorola fan because their phones have always been lighter, better looking and sturdier than the rest. The complaint I've always had against them was the interface was a bit clunky. I now use a Blackberry. Mot needs to wake up to the fact that people need to be able to customizable and tweak the interface, similar to how you can do with windows mobile based devices. They should adopt microsoft windows mobile.
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