Motorola Inc. said the limited distribution program for its StarTac phone may be a new tactic for the cellular phone industry, but it’s not a new method in the electronics or automotive world.
“This is aimed only at our high tech products, not the rest of our lines,” said Jim Caile, vice president of marketing for the Cellular Subscriber Group.
Motorola believes the StarTac phone is the smallest, lightest and most advanced cellular phone in the world. Limited shipping began in March. In May, Motorola announced a special distribution policy for the Signature line of phones, of which the StarTac is the first.
The new policy doesn’t sit well with carriers and some distributors.
“Motorola is trying to exert influence in a key area controlled by the carrier-how they want to market the phone,” said Albert Lin, industry analyst with Cowen & Co. of New York and Boston.
“Think about how odd that is. Carriers are customers. So, the vendor is telling the customer what to do with the product. The last thing the carriers need right now, with everything else they are trying to do, is another hand tied behind their back,” Lin said.
Bell Atlantic Nynex Mobile said it has rejected Motorola’s terms.
Motorola said eight of the nation’s top 10 carriers have signed up for the program and more than 90 percent of Motorola’s two dozen or so handset distributors are participating.
At the heart of the issue are Motorola’s Signature terms.
“We are looking to support the people who have historically supported us,” Caile said. “We consider whether they purchase through an authorized distributor, whether they engage in transshipping because we want people who are interested in selling to end users, not just transshippers. And whether they provide three quarters of their sales [Motorola products].”
Caile said the 75 percent is looking back to the prior six months sales; there is no 75 percent sales requirement going forward, Motorola said.
Lin said eliminating transshipping means inventory management and risk is being shifted to the customer.
“The customer could make a bad purchase and be stuck with phones that can’t be sold. If you can’t transship, it puts customers in a bind,” Lin said.
Caile said Motorola wants to make sure “that what they buy, they are dedicated to taking to the end user.”
“We just want to participate in the selection of venues where our products will be displayed and promoted. That’s all we’re asking for, to ensure the public gets a complete picture of our product,” Caile said.
So far, 1,800 locations nationwide have been approved to sell the phone, Motorola said. In general, the StarTac should be sold in a special, set-aside area with displays, with sales staff trained for the product. Motorola said it is investing several thousand dollars per outlet to makes sure the stores “provide a showplace for this high technology product.”
Lin said Motorola’s comparison of its Signature policy and the marketing technique used by the automotive industry doesn’t work.
“Customers go the dealership to buy cars. But people don’t go to cellular dealers to buy phones; they go to buy service,” Lin said. Motorola wants to make this a brand issue, when carriers and dealers have worked hard to emphasize service and network brands, he said.
