Can these new phones save Motorola?
CEO Ed Zander pushes 'experiences' rather than the phones. Welcome to the party, Ed. Fortune's Stephanie Mehta weighs in.
NEW YORK (Fortune) -- At a notably low-energy event in New York Tuesday, Motorola CEO Ed Zander unveiled a couple of newish handsets aimed at helping the troubled wireless device maker get its groove back. The storyline crafted by Zander and his lieutenants: Motorola's newest phones are being built with consumer "experiences" - not form factors - in mind.
"We have to be experience first, phone second," Zander told Fortune after the formal presentations Tuesday morning. Translation: instead of worrying primarily about how the gadget looks, or whether it flips open or uses a sliding door to reveal the keypad, Motorola needs to develop products around how the consumer will use the device.
And so the phones Zander showed off this week seemed to underscore Motorola's new efforts to build - and market - devices around the way consumers want to use mobile technology. Exhibit A: A new version of the Q phone, which is aimed at people who use their phones to send and receive text messages. Next up: The Z8, a phone Zander has dubbed a "media monster," for people who want to watch (or make) movies on their phones. For music lovers, a new line of ROKR phones.
This strategy makes a lot of sense, analysts say. Indeed, it is the very approach Motorola's (Charts, Fortune 500) competitors - Nokia (Charts), Samsung, Sony Ericsson and now Apple (Charts, Fortune 500) - already take.
"Yes, it is a big breakthrough....for Motorola," says Jane Zweig, CEO of wireless consultancy Shosteck Group. "Everybody else has done this, and it is what the other wireless device companies have built their brands around. Motorola has been built around a product." And, Zweig notes, when phone companies started to sell that product - the RAZR - at deep discounts or as giveaways, the Motorola brand suffered.
Motorola's tarnished brand isn't the only problem Zander needs to fix. The company has said it will miss sales forecasts for the year - in large part because of slumping cell phone prices. The company has been slow to roll out handsets for broadband wireless networks, known as 3G, and it recently went through a management shakeup. Just a week ago, Zander fended off raider/activist Carl Icahn's effort to win a seat on the Motorola board.
Amid such financial woes, Motorola executives wisely kept the hype to a minimum at the New York product launch. Still, the event - featuring uninspiring recorded demonstrations of the phones by footballer David Beckham, songstress Fergie and others - lacked sizzle.
Perhaps that's because Motorola had previously shown many of the phones being "launched." For example, it showed the Z8 at a conference in Barcelona a few months ago. "Motorola had to do this to ease jitters on Wall Street," consultant Zweig says. "Considering they didn't have a tremendous amount of new product, they finessed it okay."
Though Zander didn't talk about pricing for any of the devices it showcased this week, the high-end gadgets are clearly part of a strategy to charge higher prices for handsets, and reverse declines in the average selling price of Motorola phones.
Zander says the new, experience-based approach to marketing phones is already changing the way Motorola operates. Instead of debating the merits of flip-phones versus so-called "candy bar" forms, Zander says, teams think about the way the phone will be used, and design follows: "If this is going to be a camera, now we think about where we should put the (shutter) button."
He says the company is now thinking about other user experiences that, like messaging and music listening, might be the foundation for a phone, or series of phones. Motorola, Zander mused, potentially could build a device for gaming or map viewing.
However, Motorola is unlikely to try to create a phone that is all things to all people. "Unlike some of our competitors, we don't think the phone has to do everything," says Padmasree Warrior, Motorola's chief technology officer. If you pack in too many features, she says, nearly everything ends up being sub-optimal.
"There are a lot of Erector Sets out there," Zander agreed, referring to phones that boast a slew of bolted-on bells and whistles. "As an industry, we have to be careful it doesn't set us back. And we as a company have to be careful, too."