How to prevent that train wreck they call Motorola? This is a giant dynosaur in its death-struggle. There is only one way they can make it, and their stated strategy is not the way. (Regular readers - this is another long Tomi Ahonen posting, you might want to get a cup of coffee. And first-time readers, I am indeed a multiple bestselling author on mobile, lecturing at Oxford and cited in books by 50 of my peers - you might give my thoughts the benefit of the doubt..)
I'm a mobile phones type of guy at heart and love this industry. It therefore kills me that the once-proud giant of mobile radio (Motorola, which started off selling FM-AM radio sets to cars) that launched the first hand-held mobile phone is now headed to the scrap-heap of the has-beens of technology.
Twelve years ago Motorola was the world's largest phone maker. Five years ago they were still in solid second place. A year ago they had slipped to third. Last year they were alternating between fourth and fifth biggest from quarter to quarter.
THE DWINDLING FLOWER IN MEADOW IN FULL BLOOM
The mobile telecoms industry is one of a handful industries that is truly giant, with total annual industry revenues of a trillion dollars or more. Far greater than say print publishing or television or the advertising industry or the hotels or beverages industries; mobile telecoms passed a trillion dollars in annual revenues last year and joins the few other such giants including the global automobile industry, the financial services (banking, insurance and credit) industry or the food industry for example. Mobile is twice the size of the IT industry, twice the size of the fixed landline industry and five times the size of the internet industry. And Motorola has legitimately been a founder and a perennial major player in this industry.
Now, Motorola has been losing market share. That could be forgiven if there was an alternate industry that grew faster and Moto had been shifting to a newer business. Like say VHS and Betamax video cassette recorder makers, when they saw the DVD appear as a movie distribution media, and shifted the production of home video players (and recorders) to those based on the DVD. But that did not happen with phones.
The mobile phone industry sold about 150 million handsets per year a decade ago (thats about the scale of the total global PC industry or significantly more than say the videogaming consoles industry). Last year the m,obile phone indsutry sold 1.2 billion (1,200 million) handsets. The industry has grown to be 8 times larger. Motorola has been on the inside track of a dramatically growing industry and yet thrown its chances away.
Just last year under difficult situations, second largest handst maker Samsung grew sales by 22% by unit volumes, comparing first quarter 2009 to first quarter 2008. That is not the champ. The best success comes from Motorola's backyard, Canadian based RIM grew Blackberry unit sales a massive 81% in unit sales in one year (but obviously from a small base). Meanwhile Motorola lost actual handset sales in unit volumes by 46% in just one 12 month period. Yes, they lost almost half of their customers in just one year! Motorola is doing a slow motion corporate suicide, a hara-kiri move, killing itself, in full public view.
ITS NOT JUST HANDSETS
The mobile industry is not just handsets. Handsets form less than one sixth of the industry revenues. The telecoms traffic, our voice calls and text messages, form the vast majority, and telecoms infrastructure investments also form a significant part. Motorola is a major player in the handsets and the network infrastructure parts of the industry, typical of many of the major industry infrastructure providers such as Nokia and Ericsson.
The bigger part of the industry is the services side (voice, SMS and premium data services). Here the big players are Vodafone, China Mobile, Orange, T-Mobile, Telefonica, NTT DoCoMo etc. These network providers (carriers) like Sprint, Verizon, AT&T in the USA, are mostly focused on service revenues, but many also offer selected handsets and get more involved in handset design, encroaching somewhat at the usually smartphone-end of the handset business. Telstra (the biggest mobile operator/carrier) in Australia for example sells most of its top-end 3.5G phones under its own brands, whereas the majority of Telstra's 3G and 2G phones are by major makers like Nokia, Samsung, LG, SonyEricsson and Motorola.
I need to be clear about this. The smartphones end, the high end of the market, is where the major newcomers focus on. RIM's Blackberry, Apple's iPhone, the various Asian makers like ZTE, HTC, Sendo etc; as well as the luxury end of the established players, Nokia's N-Series and E-Series; SonyEricsson's Cybershot cameraphones and Walkman musicphones, etc. The software makers like Microsoft offer operating systems to smartphones just like Google now is doing with its Android. The top-end smartphone market is heavily contested. It is not an easy place to make money.
Consider Apple. They entered the Smartphone market with the most visible tech launch marketing campaign in history. They followed it with a truly desirable gadget, and then followed a strategy of severe price cuts. The result? Out of the 2008 market share in smartphones, they had 7%. This was the best tech launch in history of any tech gadget. Out of all phones, Apple share can be seen with a good microscope - they achieved 1.1% of the total handset sales in 2008. This by the most successful tech launch of all time. Can Moto hope to copy this (or improve upon this) and even if they did, by some incredible miracle, if they lose market share 46% in one year - that 1.1% gain would be comphrehensively lost in the shuffle. The error in rounding-off by the accountants. Yet another nail hit into Moto's coffin AFTER the coffin has been sealed.
Motorola's base business is in mainstream phones from the cheapest handsets for first-time buyers to mid-range feature phones. This is what Motorola's scale and distribution and sourcing ability allows it to play in. Apple or RIM or HTC cannot afford to fight globally in this end of the market, it is limited to only the big 5, Nokia, Samsung, LG, SonyEricsson and Motorola. It is Moto's "back yard" and here is where all the volume of revenue is, all the possibly attainable profit (for Moto) is. Note that Fiat cannot suddenly produce Rolls Royces and make money at it. Nor can Chrysler suddenly turn into Mercedes Benz, something Daimler-Benz found to its horror. No, you have certain DNA and some manufacturers make premium luxury products (Mercedes Benz, Rolls Royce, Apple, RIM) and other make mass market products (Fiat, Chrysler, Motorola)
If Moto has any chance to turn around, it cannot entertain pipe-dreams of suddenly conquerring the smartphone market, it has to revitalize its mainstream phones market. And this fiercely competive market is a tough nut. In the latest quarter Q1 of 2009, Samsung, Nokia and LG were able to make profits with mainstream handsets; SonyEricsson and Motorola produced losses (and Moto's total losses were over half a billion dollars, roughly as much as in the previous quarter. Think about it, the company has lost a billion dollars in the past 6 months alone while most of its rivals make profits in the same sector. This is a severely hurt animal, Moto is. A dynosaur. We should really do the humane thing and put this beast out of its misery. It is bleeding so badly, it deserves to die)
WHAT OF SERVICES?
Also the handset makers are eager to move into the services part of the industry. Apple's Apps Store for the iPhone was the first major global step into this direction, even though RIM's Blackberry corporate email solution was actually the first commercially successful such move on a global basis, and Nokia's first attempt of the Club Nokia concept was also an early move by a handset maker to enter the services and applications side of the mobile industry. Now Google's Android, Nokia's Ovi, Apple's Apps Store etc are all part of the general shifting of the telecoms game, where traditional hardware vendors are making moves into the software and services side of the industry.
Where is Moto? Motorola was the big phone maker in the analogue age of 1G. When 2G came along, Motorola was slow to shift to digital phones and also slow to adopt to the early and very "juvenile" elements of this industry as it altered. The Motorola management was stuck living in the old-fashioned USA home base, where the industry was lagging - by many measures by five years or more - and the European and Asian rivals soon learned that there was a youth movement to phones, they were no longer just business executive gadgets, and the youth wanted to personalize their phones (removable face plates) and to buy ringing tones; and the killer app was SMS text messaging. ever since they have misunderstood the shifts in the industry, Moto focused on the hardware (and very mistakenly on the form factor of the flip phone/clamshell) and avoided the services opportunities.
They are not alone. The US based executives of the mobile industry almost by universal pigheaded refusal, looked at all SMS text messaging evidence and data from all other markets outside of North America - and steadfastly refused to accept SMS text messaging. The USA was the last country to offer SMS text messaging interconnectivity across networks, and very stupidly even today, the US carriers charge their customers for incoming SMS text messages (often USA based readers are stunned to find out that in the rest of the world, we are not charged for inbound messages, only for the ones we send, but that is another story of US backwardness in mobile, for another day).
But we here at the Communities Dominate blog and our regular readers know full well that SMS text messaging is addictive. Proven to be addictive in university studies from Belgium to Australia. More addictive than email even like that on the Blackberry. This is not a recent revellation, as it has been to the US market last year with the Obama campaign and its creative use of SMS. No, we've reported on SMS as the primary use of mobile phones, for a decade.
AMERICANS AND SMS
Ok, step back. I was in Florida in 2000, presenting as Nokia's Global Head of Business Consulting, to the first mobile internet conference held on the North American continent. This was after Nokia had become the world's biggest handset maker. This was after data services had been launched on mobile, half a year after a wildly successful mobile internet conference in Europe, and a year from when the first 3G network would go live in Japan. The audience was attuned to the data services opportunity of cellphones. So there was this global guy from the biggest handset maker based in Finland where the world's first mobile internet content had been sold, to give them the story. I gave them two business cases and all the evidence anyone would ever need. I said the two biggest successes for the mobile internet - in America - would be ringing tones and SMS text messages.
The audience looked at me like I was the Alien monster from the Aliens movies. They hated my story. They thought these were the dumbest ideas ever heard and of course they refused to even ask follow up questions or to get my slides so they could independently follow up on the story.
Obviously I was proven right. Ringing tones were a multi-million dollar industry even in the USA in less than three years from that point, and SMS has grown every year and today nobody doubts its role in America. Ringing tones alone today worth over 5 billion dollars and spawned a mobile music industry worth more than 10 billion dollars. Ringing tones alone today are worth more than all messaging services and revenues on the internet put together.
But its that kind of refusal to face facts, that helped destroy the original home base of the giant mobile industry - and biggest national power base into this Trllion dollar industry that once featured Cingular and Lucent and SBC and Nextel and yes, Motorola..And note that Verizon, AT&T, Nortel and Sprint are mere shadows of their global relevance, compared to a decade ago. There was a time when American carriers owned vast global footprints and empires deep into Asia, Australia and Europe; with practically owning the market of Latin America. Today American carriers have retreated from the international empires, bequething those to the Spanish, Italian, Chinese, Singaporeans, Japanese, British, French, German, Mexican, Russian and Middle Eastern mobile operator/carrier giants. And what remains of the US mobile telecoms industry are increasingly owned by foreigners, Verizon 40% by Vodafone, T-Mobile wholly owned by German T-Mobile/Deutsche Telekom etc, or legitimately bankrupt such as Nortel; and even newcomers like Virgin Mobile owned by the British.
Oh, and SMS? Last year, 2008, the American use of SMS text messaging reached the level of 4 SMS text messages sent per subscriber per day, across the total phone subscriber base, including all who don't use SMS, according to the CTIA. This usage level is on par with Europe. The USA has finally caught up with European average SMS usage level. Thats still years behind the world leaders, the Philippines where the average subscriber sends out 26 SMS text messages per day. But yes, nobody doubts SMS in America anymore.
And even more revealingly, 2008 was the first year when more communciation by Americans on their cellphones were initiated as SMS text messages than as voice calls (!). Yes, even America has now caught up with the global trend, that the primary use of the cellphone is no longer voice calls. It is text messages. Not Blackberry email. Basic SMS text messages.
SMS IS THE KEY
Take a breather and repeat that thought. The US industry standard body, CTIA, reports that for 2008 of the total traffic originated from cellphones in America, the biggest type is now SMS text messaging, not voice calls. It is not something silly that this crazy Finn ex-Nokia guy Tomi Ahonen says. Now the evidence is there, by the American industry itself. The primary use of a cellphone even in America is no longer to make voice calls. It is to send SMS text messages. Anyone reading my books would have known this years ago and been able to capitalize on the biggest data opportunity on the planet. But it doesn't matter when someone learned of it. Now the facts are in, that this holds true also for the USA. If any so-called experts says the primary use of a cellphone is to make voice calls, fire that expert immediately as obsolete.
The primary use of a modern cellphone is NOT to place calls. It is to send SMS text messages. Not to send email. To send SMS text messages. Not to access the "real" internet. To send SMS text messages. That is the primary use of the phone today. Not just in America, not just the youth. The whole population, any age, and globally, everywhere.
If you do not understand this shift, it is as catastrophic, as misunderstanding the primary use of a telephone that it is no longer used as a fire alarm (that was the first use of phones over a 100 years ago. The owners of rich households in America who could afford a phone and its connection, would not even TALK on their phone. Their SERVANTS took messages and spoke on the device to send spoken messages, like telegrams.) It is as catastrocphic as to misunderstand the primary use of a computer to be military ballistics calculations (as they were in the 1940s and 1950s). The world has changed totally. No longer voice, my dear Moto-child, it is now SMS.
So returning to our Motostory. We have been saying that SMS is addictive for literally this whole decade. I've said so in all my books since M-Profits in 2002. My latest hradcover book Mobile as 7th of the Mass Mediahas a chapter on just SMS use, and includes 4 case studies with significant SMS use (Just-in-time Dentist; airline mobile check in with SMS, Blyk the free SMS and voice provider from the UK and SMS votes in American Idol/Finland Idol/People's Idol).
Getting back to SMS. The global SMS industry is worth over 100 billion dollars. Since the first person-to-person SMS message was sent in Finland in 1993, the SMS text messaging industry has been the fastest-growing 100 billion dollar industy in the economic history of mankind - sustaining an average annual growth rate of 47% in revenues, year-on-year, for 15 years in a row ! Or in human terms, the industry doubles in size every 22 months !!!!!
SMS text messaging in 2008 was as big as the global music industry, and the global hollywood movie industry box office revenues; and the total worldwide videogaming industries, put together. That is just SMS text messaging in 2008. And this year it will be far larger again.
Back to Moto. They saw all the facts and all the data, but refused to understand. What does it mean that SMS text messaging is addictive? This past decade Motorola has had one hit product, only one. The Razr. It was a lucky product in an optimal time and yes, its design was somewhat brave. But Moto didn't have a second act. The Razr fizzled out and they had nothing to carry them on. And the Razr was like all Motophones, poor at SMS text messaging. Kids who received Razs as Christmas gifts returned them in droves, stunning both their parents and the store personnel of Moto dealers worldwide.
MOBILE INTERNET IS NOT IT
Oh, and lets be clear about this too. The American pundits will peddle another old tired tune, the "real internet" on the mobile phone. They will marvel at the iPhone and how they shipped a billion apps (yes, an impressive number, to the modest scale of the IT industry). This is PEANUTS. This is pointless. The vast majorty of those iPhone apps were FREE. No wonder they shipped a billion. But you know what. The mobile internet - the "not real" internet on cellphones, SOLD a Billion downloads per YEAR by 2001. That was not the year the iPhone launched. 2001 was the year that the iPod launched. Yet that year the mobile industry SOLD more downloads to the mobile internet, than this year, Apple celebrates a billion mostly free downloads to the "real" internet on the iPhones. Yeah, it is an impressive number, for the modest size internet (6th mass media) industry, but it is PEANUTS for the far greater 7th mass media mobile internet opportunity. But our readers do know that, and anyone needing to understand, pick up my book and learn that there are 7 unique abilities on the phone that you cannot replicate on the legacy internet..
But yes, this is not news. I did chair the world's first mobile internet conference in Amsterdam in 2000, six months before that fateful event in Florida that I mentioned (Tomi you sound bitter, ha-ha); and my books were the first to discuss the internet on cellphones - in fact my white paper at Nokia was the first published document on how to do the "real intenet" on a mobile phone network, back in 1999. I have been saying since 2002, that the real opportunity is NOT in copying the existing internet to the phone. It is as pointless as putting a real horse into a car (horseless carriage). As pointless as selling a TV set for a family who wants to listen to radio. As pointless as displaying today's newspaper front page for a cinema audience to read. Mobile is the newest mass media, with far superior abilities, and the real money is made with those. Not copying the older media.
The mobile services opportunity (as I call it, the 7th mass media channel) is as different from the internet (the 6th mass medium) as TV is from radio. The mobile opportunity is AS much GREATER than the internet, as TV is to radio. It is silly to focus on copying the internet to the phone, UNLESS you do the bigger thing, the mobile services part.
Take the iPhone. It is by Apple's own admission - Steve Jobs said so - their entry to the netbooks market. It is Apple's netbook. It is by definition, an internet access device primarily, with mobile phone functionality as second needs. It makes a GREAT internet access device. But it is hopeless - in fact incapable - of handling the FAR GREATER mobile internet opportunity. Take MMS. Picture messaging, MMS is used by 1.35 billion people. More people send or receive picture messages on their phones, than send email on any PC, laptop, desktop, netbook - or indeed smartphone like the Blackberry, iPhone or Nokia E-series, combined. More people use MMS than use email. Today. Worldwide.
Half of Asians use with a phone send or receive MMS picture messages. Thats more than 3 times as many people as the TOTAL population of the USA, not just active users of the "real" internet - a fraction of that total. Yet the iPhone, while it is a cameraphone and has a good screen, it cannot send and cannot receive MMS picture messages. How dumb is that? Essentially every other cameraphone on the planet can do MMS, except the iPhone. It is a great internet phone for the 6th mass media channel, but the hone is a very poor device for the far greater mobile internet opportunity of the 7th mass medium.
Look at MMS. The money in MMS is worth over 30 billion dollars worldwide. Thats more than all internet content revenues put together. Yes, all service fees paid to Second Life or World of Warcraft or Playboy or the WallStreet Journal or playing poker at 888.com - put together. I don't mean "mobile access to the real internet": I mean all content revenues of ALLof the REAL internet, broadband and narrowband, from Iceland to New Zealand. Just MMS picture messaging alone is bigger than all that. ONE category of the premium services for the 7th mass media channel. Mobile is a giant. The internet is not. The iPhone is a great 6th masss media device, arguably the best 6th mass media device on the planet, but its a very poor device for the 7th mass media opportunity (but Apple know this and are working to improve it).
So don't be misled. The opportuntiy for Moto is not to try to make a touch-screen wonderful internet tablet. No, that is a TRIVIAL market. Trivial in the total scheme of things. The only way Moto can survice is if it manages to turn around its basic line of mainstream phones, not create one uber-gadget for the internet mindset. To try to out-iPhone the iPhone.
MOTO ROKR OR MOTO-i-PHONE
Consider their partnerships. Motorola won the contract to do an "iPod phone" with Apple, after the iPod was a roaring technology success. The iPod phone project was a collaboration. Apple negotiated with all major makers including Nokia to do the iPod phone. Motorola won that contest. They really wanted it.
What did Moto produce out of that collaboration? The Rokr. A total rubbish lost cause of a music phone. A MotoLozr. What did Apple get out of the collaboartion. They took their time and did not rush out the product, but the end result was the iPhone !
The same project that produces the Rokr when Moto execs are in charge, and the iPhone when Apple are in charge - this tells us that the brain power of Moto is severely strained. These two phones are not on the same planet even. iPhones are from Venus, Rokrs are from Mars. No, thats not fair. Not Mars. What was the planet that is not even a planet anymore? Pluto. iPhones are from Venus, Blackberries are from Mars, but Motorolas are from Pluto...
TOMI YOU ARE PRETTY HARSH ON THE OLE MOTO-MOTO
Yes I am. I want to get the point across. Hello-Moto? The company lost 46% of its existing market in just ONE year. The company is rushing to its own demise - and pressing the accelerator as it heads down into the abyss. It has to wake up and undestand, what is wrong, why are they losing.
So, first the obvious. Apple iPhone is not their nemesis. Yes, the iPhone did severe damage to Motorola and more than actual high-volume sales, they upstaged Moto in its home market, and proved that a cellphone can be highly desirable gadget, if done right. Moto had had 25 years to try to achieve that and never did. But much as it seems everybody wants the iPhone, it is not for everyone. In the best market for Moto, its home market of the USA, Motorola is available on all networks. The iPhone is not available in a CDMA technology version, so half of US customers cannot even use the iPhone on their networks. Verizon and Sprint cannot connect calls or messages to an iPhone through their network. The device is not compatible. So right from the start, in the US home market, Motorola has a "safe" sector, half of the total market cannot even consider an iPhone because their networks do not support it.
And they do compete in different market segments. The iPhone is a smartphone, a premium phone with lots of features and correspondlingly high cost. The iPhone competes with the Nokia N-Series and E-Series and the SonyEricsson Walkman phones and Cybershot phones, and the Blackberries; but not with Motorolas. Moto competes in the mass market, with LG, Samsung and Nokia's mainstream product range.
So the iPhone (and RIM's series of Blackberries) is not the nemesis. They are the embarrassment to Moto HQ, that North American newcomers to the phone game can make desirable and profitable phones while Moto cannot. But that is not the answer.
The smartphone market is not big enough to save Moto. And the smartphone market is too heavily saturated by all major players, who are hungrily releasing top end premium phones into that space. A "hail mary pass" attempt to produce another Razr - say with the Google Android based smartphone - has zero chance of saving Moto, because so many others are already there. HTC and Samsung have already released Android phones. Many more will be out there by the time Moto has theirs. They will be just one of many smartphones - but to achieve its desirability - Moto will have to do massive marketing to raise their profile to try to gain traction in a market where Nokia N-Series and Apple iPhones and Blackberries are the established range; and even where Sony's iconic Walkman brand and Cybershot brand cause losses - losses - with premium smartphones made with the help of the world's most desirable consumer electronics brand, Sony. The costs of the marketing and advertising to break into that market would destroy any profits they might generate. Its sexy for engineers to plan smartphones. For Moto in this stage, it is tantamount to corporate suicide.
Who are Motorola kidding with their smartphone strategy. They are throwing money away with this desperation move.
HOW TO DO IT
Remember what a Nokia exec - whose responsibility was the strategy to commercial success in the next generation 3G space, a Tomi Ahonen - said in Florida in 2000 - that SMS was to become a killer app in America? Imagine if one Moto exec had been in the audience, and given that thought the benefit of the doubt. Not to believe it, only to give it the benefit of the doubt. Not to arrogantly say that the Finland example cannot succeed in America, but rather, to allow the chance. Only to follow up. And that one exec only examined the evidence that I provided back then in 2000. And even if doubting the initial facts, to then observe the patterns repeat, consistently repeat, without failure, from Scandinavia, as they repeated in Britain and France; in Singapore and the Philippines, in Russia, in South Africa and South Korea; in Israel and Italy; in Brazil, in Equador and Mexico. By 2004 the evidence was so overwhelming, that this strategy should have been put in place.
What strategy is that? Make Moto the best phone at SMS texting.
How blatantly obvious is this? How stunningly simple and easy? How inevitable? How clear. How compelling.
The evidence is in. SMS is addicive. The evidence is in. Even Americans now prefer SMS to voice calls. The evidence is in. The primary use of a cellphone today, in EVERY market globally, is SMS text messaging. There is NO OTHER addictive service on cellphones. Not voice calls, not music, not gaming, not the internet. Only mobile messaging. And of the mobile messaging, SMS is by far the most addictive, to a whole order of degree more so than the wireless email like on a Blackberry.
Which phone brand today is the best at SMS? The Blackberry ! Yes, its a great emailing phone, but most new users of the BB do not use the corporate email client of the Blackberry. They are young users who are addicted, who send between 20 and 100 SMS text messages - per day - and they LOVE the BB.
I do NOT MEAN for Motorola to rush to copy the Blackberry. I do NOT mean that Motorola should try to out-Blackberry the Blackberry. The Blackberry is a smartphone. Its very expensive to make. But Moto has a range of current phones that have a set of features and abilities. Every one of them can do SMS and has a basic tripple-tap keypad and basic screen. All can do SMS. But the Motorolas are notoriously HORRIBLE at SMS text messaging.
Nokias tend to be second best at SMS behind only Blackberries. Almost all Nokias do it with basic T9 tripple-tapping kewypads, not Blackberry style QWERTY keyboards. Samsungs tend to be right up there with Nokia on SMS and LG is not far behind, also with basic T9 text entry. Why are they so good at SMS? Because Nokia is headquartered where SMS addiction was first observed, in Finland. And Samsung and LG are there in South Korea which is now one of Asia's leaders in SMS. They know from their backyard. They did their homework, and they knew A DECADE AGO that SMS is addictive.
Blackberry got there by accident. They thought the future was wireless email - a very understandable misunderstanding for execs based in North America. But the execs as RIM HQ in Canada were not afraid to face facts. They noticed that the North American pattern of wireless email was not replicating globally. That the users of the BB in Europe and Asia used them for SMS, not for email. And very smartly, they adjusted. The Blackberry refocused away from a corporate email optimised device to a mass market consumer device at the high end of the price range with good cameras, screens, browsers; all while holding onto their brilliant keypad design and ease-of-use on the only addictive service on mobile - SMS text messaging. In the process RIM has become the 6th bigest handset makerin the world. By focusing on being best at SMS, not on wireless email.
Last year when the global handset market shrunk by about 15%, Blackberry increased unit sales by 81% !! When Motorola lost about half of its customers RIM nearly doubled its customer base. Did they do this by slashing prices - no, the average selling price of the Blackberry line was increased 6% in the past 12 months. They nearly doubled their market share - while INCREASING their prices. But this is the worlds' best line of phones at SMS text messaging, and SMS text messaging is addictive, used by over 3 billion people on the planet - more than twice as many as the total who use the internet, more than 3 times as many people as own a personal computer of any kind.
So how for Moto? Take the strategic insight and make a total corporate push for it. Focus the whole company on this one clear and simple mission. Make Moto the most desirable (mainstream and low-end) phone for texting. Across its whole product range. Don't worry about the high-end smartphone segment, that won't save Moto. Let Blackberry have it. Yes, do make your Android phone and make it a good texting Android phone too, but that is not the answer.
What of the rest of the 14.7 million Motophones sold this past quarter. Make it a strategic focus, to reinvent Moto as the ultimate texting phone. Like BMW says they are the ultimate driving machine, make Moto the ultimate texting phone.
How? First, to benchmark. Take a group of teenagers at a couple of universities in the major markets (countries) of Moto-focus, like USA, China, Brazil, Russia etc - and take the top 50 current phone models there, and all current major Moto phones and benchmark them with the kids texting. Get honest real benchmark data. Establish an internal perforance standard (say the speed of the best Blackberry with a T9 keypad, ie not the full QWERTY keypad, and call that the index mark of 100).
Measure every Moto phone against this benchmark, and also the major rival phones.
Second, teach the internal R&D staff. Issue a global edict from HQ but then offer the staff the best training you can. Not by American "telecoms consultants" who come from the fixed landline telecoms world and dont' even understand mobile; nor those from the IT industry who will preach the faulty gospel of email and unified messaging and IM instant messaging on the phones; no get European or Asian experts to teach your staff and help them understand the addicition of SMS and how Moto can monetize that insight, to immediately crash-start the rush project to change the DNA of the company.
No longer a voice calls phone maker, but an SMS text messaging optimized handset maker. Touch screens DO NOT MATTER. Touch screens (withotu a separate keyboard or keypad) are great for email, they are horrible for SMS. Do NOT focus on touch screens. Its costly and will not produce the results. Camera resolutions are good, but its a game Moto can only keep up with, not gain an advantage. LTE and IMS and 3.5G are all tech evolution stories, that keeps up with the neighbors but will not produce a winner. eMail is last century. SMS text messaging is the only proven addictive service, and only SMS can save Moto.
MOTO MODEL T
So, then release a T-Series of Moto phones. Texting phones. Not with fancy Blackberry style keyboards. No. Using the CURRENT lineup of handsets, study them carefully, and put the best brains on the job, and create a series of the best phones for texting.
Use the benchmarks. See why Nokia has such ease-of-use in responding to an SMS, as few clicks as possible. Make texting a first button feature on the keypad. Make it a T button. This is where Moto texting starts. Hit the T button, and you're texting.
ELIMINATE WASTE in options. Don't ask do you want to make an text or to read one. Every time they hit the T button it is to create, take them directly to SMS text creation page. Don't ask them to select now from a menu. These users are ADDICTED to SMS, they want SMS. Take them directly, without any options, to the text entry field. Do not slow them down with the question "do you want to do an MMS, SMS or email" no, only SMS. Direct to SMS. Yes, give them the options, but later. Make this the FASTEST phone to send an SMS.
When done, don't ask them to verify. They send 10 or 20 or 100 messages every day. They are NOT your mother attempting to vote for American Idol. These are Generation C (Community Generation) who send text messages instinctively. They do NOT need to verify. On a T-Series phone, the message goes, without asking for "are you sure"
But give them excellent options. To save the draft, to select multiple addresses, etc. And when messages arrive, if you hit the T button, it knows to display the arrived message, not to create a new one. Some intelligence here. Make all SMS features available at the the top of the menu, not hidden beneath unnecessary keystrokes.
Allocate maximum memory to store SMS. Study your target user - Generation C (half a dozen books discuss this new texting generation, my book Mobile as the 7th Mass Mediahas two chapters on youth and Gen C) lives and dies by SMS. They want to save all of them. Make it easy and friendly to them. DO NOT LIMIT the options. Do not default them to save only 20 outbound messages. Save ALL of them, inbound AND outbound SMS, until memory runs out. Test test test. Compare to the best texting phones out there, and make the T-Series BETTER and FASTER at SMS.
Give the user a friendly easy-to-use utility to store, sort and search the history of SMS - study Nokia's Lifeblog for example for this. But make the Moto T-Series the best texting phone on the planet.
UNDERSTAND that the PRIMARY purpose of that new phone today, is to send SMS text messages, it is NOT to make voice calls. That is a radical change in design.
Not all Moto phones are easily suitable for this, but some will be, don't try to turn a turkey into a T-Series (and ruin the branding), but make sure that at launch there is a series of phones to showcase this ability, across the price range from enty phones to the latest Razr (Razr Model T)
Also select the models for this usability. A candybar form factor phone is inherently more suited for SMS texting than a clamshell phone. Understand what I said. A candybar form factor is inherently more user-friendly for SMS than a clamshell phone. Just like a station wagon car form factor is more friendly for familes and pets and hunters than a basic sedan car form factor - and obviously the SUVs of today have a "station wagon" form factor, but with bigger wheels, than a sedan form factor - so understand your use and your users. Make most T-Series Motophones user-friendly for texting also by form factor. Make the majoirty of T-Series Motophones be in the candybar form factor, while including a few classic clamshells as well.
Re-design the keypads themselves. Test test test. Not with your engineers. Test with Gen-C members. Teenagers ! Don't give the biggest weighting of the research findings to the USA or Canadian texting youth they are recent converts to SMS, give the biggest weighting to those from heavily-texting countries like the Philippines, Singapore, South Korea and Malaysia.
Give the test groups identical phones with alternate keypad responsiveness variants, bigger and smaller buttons, different materials, and the tactile responsiveness - the springy response that the key will generate when it returns to its neutral state. Try hard and soft responsiveness, try different materials. Select those keypads which are inherently BEST at texting. Dont' worry about cost - it will not matter one dollar in the production cost, not even one tenth of one dollar, but it will be night-and-day in the usability if you build the handsets to be optimized for texting..
And an addicted SMS use who can detect the difference, will pay MUCH MORE than one dollar more for a great texting phone than an average phone. You will make profits on this, not losses. Do not compromise on the T-Series.
FUNCTION OVER FORM
Don't worry about appearance !!!! The Blackberry is very un-appealing as appearances go, but is functional. The T-Series has to be best at texting, and there are many brilliant Nokias, Samsungs and (non QWERTY) Blackberries that are great at texting. You have to be BETTER. There cannot be any executive in the T-Series business unit of Motorola, who will think, that form trumps function. For the T-Series, if form can be improved with ZERO cost to function, it is ok, but if form hinders one percent of function it is NOT ACCEPTED. Nobody will suggest, this will improve the looks at the cost of texting speed. Speed comes first for the T-Series. If you want a pretty phone, buy an iPhone. But if you want the best texting phone, it has to be T-Series,.
The buttons don't need to be flush (so some design guru can win some awards) or exotic or pretty; they have to be tactile usable and very comfortable for rapid and frequent texting. Even if they protrude. That means again, clamshells have problems - candybars better.
SINGLE HANDED AND BLIND
The phone form factor has to be suitable for this type of use. Understand Gen-C!!!! The SMS text entry has to be able to be done single-handed and blind. So for example the iPhone fails totally this rule. It is not an optimal texting phone because you cannot write messages single-handed and blind. The Nokia N82 is another mystery-phone to me, why on earth would Nokia, knowing full well how addictive SMS is, to release such a phone with a fantastic camera and flash but such a horrible SMS interface. The keys too tiny and too low on the handset. Normally Nokia phones are rock-solid on excellence in SMS.
A further reason for candybars rather than clamshells is hidden phones in school - we all know this but Moto cannot afford to lose this segment. Kids take phones to class. When the teacher insists they hand in the phones, they give their old phones away. But they have their new - candybar shaped - phones hidden underneath the sleeves of their sweaters, and they can text through the fabric. This is the truth, I've seen many kids show this to me. You can't do that on a clamshell phone, it HAS to be a candybar.
The more perceptibly the keys protrude from the surface of the candybar phone, the better the texting is THROUGH THE FABRIC. Test for this. While it will be quite unethical to market a phone as the "best test-cheating phone", that is part of the target segment and its a genuine use-case. If the phone can be operated well through the fabric - single handed operation from sleep state to sent message, without seeing the display along the way - then it is "good enough". Test test test. This has to be worthy of the T-Series. One of your low-end teenager phones HAS to be best at texting through the fabric, else you lose this whole war. We are talking about survival for Moto. Do not compromize.
So Moto releases its T-Series. Each phone is remarkably re-engineered from keypad mechanics to software and menu design to SMS message storage, to be optimized for texting. Take phones from the whole range, high end, medium and low-end.
Make sure, that when launched, ONLY phones that exceed the current benchmark of Moto, will get the T-Series label. Not one dog in this new launch. Not one. Eliminate every phone that fails (and fire those staffs who cannot produce a succesful T-Series variant. This is not rocket science. This is a relatively easy modification project for any phone platform) We are not integrating any radical new technology into the phone platform.
LAUNCH T-SERIES WITH TEXTING
Then do a massive marketing push. Create a world championship in SMS texting speed for obviously all brands of phones - make it three classes - the T9 (normal tripple-tap) keypads; the QWERTY keypads like the Blackberry and for example the Nokia E-90; and the touch-screen phones like the iPhone. Get everybody to notice that Moto has a super high speed texting phone SERIES.
Sponsor every texting TV show like American Idol, Big Brother etc. Run parallel tests to showcase the speed of texting. Give freebie phones as prizes. Let all texters know that there is a new king in town.
Sponsor the bloggers and mobile bloggers such as Twitter users. Show them that Moto is the best phone series at text generation. Get them to blog about the T-Series.
The heavy users will go and try the T-Series. They will NOTICE that these are better, because Moto will not have poor phones in this new T-Series range. Yes the top end Blackberries with full QWERTY keyboards are perhaps better, that doesn't matter. Most people cannot afford a BB or an iPhone or an N-Series. Among the normal T9 based tripple-tapping phones, the Moto T-Series will be the best.
The total cost in hardware - to just ADJUST the exiting feature set, no new higher resolution cameras, no higher memory, no bigger displays, no better batteries, no better CPUs etc - is negligable. The cost in software design is considerable but not insurmountable. And far far FAR cheaper than the R&D already being done for new models and ranges.
It can be done in a matter of months. Moto could have the T-Series launched this Autumn and start to regain market share - and become a desirable phone. Most of all, desirable not as your parents' phone. But desirable as a youth phone. Make it Moto's mission that the T-Series become and always will be the best cellphone for texting. The must-have phone for Generation C. And we're not talking of the faulty definition of GenC as "Generation Content"; no this is Generation C for Community. The texting generation! The cameraphone feature is not addictive ("C for Content"). SMS text messaging is addictive. Genrateion Community! Texting generation. That will restore Moto's luck and turn the company around. This is the only way, and time is running out.
In the past year Moto lost 46% of its market. If these trends hold, this time next year Moto will no longer be the biggest mobile phone manufacturer of North America, that will be RIM with its Blackberries. Motorola will be struggling to fend off Apple, and may well find itself behind Apple iPhones - and if so, then also to fall out of the global Top TEN in phone makers. They would go the way of many a famous cellphone brand like the Philips and the Siemens and the Panasonic and the Alcatel. A relic of history. "You know once upon a time there used to be a giant American handset maker called Motorola.."
PS - if you feel you didn't get enough, and want more details, insights and advice re Motorola's prdicament, please refere to my blog exactly a year ago, when I gave advice to Moto on their CEO search in a widely praised blog piece. Note that blog story does repeat several of the items in this blog story. Read "On Search for Moto-CEO "