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Motorola Innovation Void in Mobile Handsets

Motorola's poor second-quarter performance in the global mobile phone handset market helped boost the results of its competitors -- most notably Samsung -- according to a preliminary ranking from iSuppli Corp.

In the second quarter, Motorola shipped 35.5 million mobile handsets, a 21.8 percent decline from 45.4 million in the first quarter of 2007. Company market share plunged to 13.3 percent, down 4.6 points from 17.9 percent in the first quarter. Motorola was the only company among the Top-5 companies to suffer a decline in shipments.

Meanwhile, Samsung of South Korea shipped 37.4 million mobile handsets during the period, a 7.5 percent increase from 34.8 million during the first quarter. This gave Samsung a market share of 14.1 percent, up from 13.8 percent in the first quarter -- allowing it to displace Motorola as the world's second-largest mobile-handset OEM in the second quarter.

"The mobile-handset business moves fast; the rapid pace of innovation means that products that were red hot last quarter are ice cold the next quarter," said Tina Teng, analyst, wireless communications for iSuppli.

"Motorola's product mix in the second quarter remained largely unchanged compared to the first quarter, with a substantial proportion of upgraded RAZR handsets being offered. With its product line standing pat, Motorola reported its Average Selling Price (ASP) improved slightly, rising by $1.25 compared to the first quarter. This resulted in Motorola suffering an operating margin of negative 6.2 percent during the period."

Motorola had held the number two rank in mobile handsets at least since the first quarter of 2001 when iSuppli began tracking this market.

Meanwhile, Samsung increased its handset sales in Europe. The South Korean electronics giant also shipped a larger number of handsets to emerging regions, including Latin America and Asia.

Samsung's ASP took a tumble during the quarter, dropping by 4.5 percent compared to the first quarter. However, this was due to Samsung's strategy of selling greater quantities of low-cost handsets to emerging regions, according to the iSuppli market assessment.

I believe that Motorola needs a new 'bold goal' for its handset design team. No more tweaks to the current device portfolio. Instead, create a totally new multimedia-centric device that re-imagines the notion of a simple user interface, and thereby make it really easy to find content within a very large media library.

Perhaps, voice recognition-based media search and selection is an opportunity? I've been a user of Google's 'experimental' directory assistance (1 800-466-4411) and I've found the UI to be very effective at voice-activated data selection from their top-ten category lists (i.e. search local Italian restaurants, by zip code). Now, imagine translating this model to finding digital media, by music/video genre -- as an example.

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