The Razr cut both ways.
In the past two years, as its Razr-driven joyride skidded into a ditch, Motorola Inc.’s massive advantage in its home market has dwindled to a narrow gap.
The relentless hunger and proliferating portfolios of Samsung Electronics Co. Ltd. and LG Electronics Co. have earned them big market share gains here in the same period.
These juxtaposed trajectories have led to a tight grouping of these three vendors’ U.S. market share that promises a competitive donnybrook in the second half of the year.
Moto’s domestic slide
Few analysts doubt Motorola’s ability to right its ship through a combination of design and engineering prowess and marketing, distribution and brand power. But the company has bled talent and its organizational and financial woes have cost the company precious time in an unforgiving market with rapid product cycles.
First, the data:
In the first quarter of this year, Motorola held 25% U.S. market share, down 9% from the 34% it held two years ago in the same quarter, according to recent data from Strategy Analytics. In contrast, Samsung’s first-quarter share was 22%, up 7% from the 15% it held two years ago. LG had 21% U.S. share in the first quarter, up 5% from the 16% it held two years ago.
According to analyst Neil Mawston at Strategy Analytics, Motorola has been plagued by a “lackluster” portfolio and failure to deliver a worthy successor to the mega-hit Razr. Samsung and LG, conversely, have exploited the window of opportunity provided by Motorola and Nokia Corp.’s lack of U.S. traction to deliver a slew of appealing handsets that better serve their carrier partners.
“Can Motorola bounce back in 2009?” Mawston asked, rhetorically. “Yes, it definitely can. It has the elements to achieve that – a famous brand, a huge retail presence and an extended logistics network.”
“If Motorola can refresh its handset portfolio over the next 12 months and return to the top of the ‘product cycle,’ it could quickly recover.”
Delivering a “hero” device
John Jackson, analyst at Yankee Group, said his firm’s research reflected a similar market share pattern.
“The short answer is that Motorola’s rate of product introduction and distribution has slipped across all models and categories – it’s a general execution issue,” Jackson said.
“Meanwhile, Samsung and LG have taken the high ground,” the Yankee Group analyst said. “They’ve delivered the ‘hero’ devices that deliver the carriers’ ‘hero’ services and the breadth of their portfolios has given them a broader footprint in the U.S.”
It’s hard to determine exactly what role Motorola and Nokia’s weakness in the U.S. has played and how much Samsung’s and LG’s products have contributed to the latters’ rise, Jackson said. But there’s little doubt that the Korean vendors’ success is partly tied to their relentless delivery of an array of feature phones with large, often touch-based displays that provide multimedia services.
“When these vendors see a trend, their ability to respond is peerless,” said Jackson. “They are execution machines. They are on the carriers’ shelves.”
Future tied to pipeline
And, with AT&T Mobility and Verizon Wireless in fierce competition – “the two national monsters going head-to-head” – the Korean vendors’ unmatched ability to respond to trends has allowed them to seize the moment, according to the Yankee Group analyst.
Jackson agreed, however, that the sleeping giant may yet awake and again cast its formidable shadow across its homeland.
“Whatever Motorola has in the pipeline for the second half is unknown,” Jackson said. “You can’t assume that there’s nothing, but you also can’t assume that things will change.”
