Motorola is now a part of Lenovo and sold ten million smartphones in the last quarter, up almost 120% compared to the same period a year ago. Lenovo have maintained their confidence in Motorola returning to profit in four to six quarters and a big part of this is expanding the brand across the world – we’ve already seen this happening with the launch of the Moto G, Moto X and Moto X Pro in China. Motorola’s position in the market is an interesting one: it competes against Apple and Samsung, the two market leaders, but Motorola Chief Operating Officer, Rick Osterloh, seems to have the same ideas that I do. In a recent interview with Forbes he reported that the company’s strength is its ability to offer “an alternative to other premium brands at a much better value… We are going through one of those fascinating shifts where people are starting to realize that you don’t need to pay $600 for a top-tier phone to get a top-tier experience…” I don’t suppose Samsung are reading this article, but I said it yesterday and I’m saying it today: offer more for less, more more for more.
This is exactly what several Chinese manufacturers are doing: Xiaomi’s business is essentially based around offering better smartphones for less than the other guys (competing most closely with Lenovo and Huawei). It’s been a wildly successful business plan. Yes, Xiaomi’s margins are tiny (under 2%, whereas Apple’s margin is around 30%) but their growth is phenomenal. Motorola clearly want a slice of Xiaomi’s pie: both are aiming to provide high end smartphones for mid range money. This is good news for customers and bad news for businesses concentrating on selling high end smartphones for high end money. Lenovo already have significant presence in China; they’re the largest PC seller and dominate the low end smartphone markets. They have a significant network of retailers and resellers throughout the country. Motorola can use Lenovo’s infrastructure.
Whilst the Chinese market is important, Motorola isn’t ignoring the rest of the world. Far from it. Under Google’s wing, Motorola sold into ten markets, predominantly to give the business the time to stem losses. This involved streamlining the portfolio, working out issues in the supply chain and even cleansing their smartphone software. Now Motorola is active in fifty countries with plans to increase this to over sixty in the coming year. They’re also working on new devices – we’ve seen rumors of an upgraded Moto E plus a smarter smartphone based around the Snapdragon 810 processor. I would like to see Motorola sticking to a handful of devices, because a clear low, mid and high end product line makes life easy for customers and reduces marketing costs.
To conclude; Motorola is going from strength to strength under Lenovo’s ownership. They’ve gone from boom to bust; are they heading back towards a boom? Let us know your thoughts in the comments below.
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