Moto's European Pullback
>> Motorola Confirms Pullback from Europe
Rethink Wireless Daily Newsletter
17th November 2008
rethink-wireless.com
When Motorola announced its third quarter results and reorganization recently, Europe seemed almost to have disappeared off its radar.
Although co-CEO Sanjay Jha did not offer many details, he was clear that Europe would be a low priority in sales terms compared to the Americas and some emerging markets, and now the company has detailed a plan that will be seen in some quarters as the prelude to a withdrawal.
The beleaguered handset maker said it will focus its cellphone activities on just a small number of western European countries (it still sees growth, and some chance of competing with Nokia, in some of the higher growth eastern territories, and in Russia). It will also reduce its costs dramatically by working with just two channel partners in western Europe – Telefonica O2 and retailer Carphone Warehouse.
This streamlining will involve a mass reduction of Motorola’s own salesforce and other workers in the region, and there will be no major handset launches until the end of 2009. Given the weak performance of Motorola devices in the past few years – only about 10% of its sales are in Europe – the rejected operators may not be too upset by the new strategy, especially as many are looking to support fewer handsets. However, Moto is placing a high level of confidence in just two firms, with which it says it has had a close relationship since the heady days of the RAZR’s early life.
In the UK, in particular, O2 is heavily distracted by its iPhone exclusive, though in western Europe, Telefonica also operates in its native Spain, Germany and Ireland.
The new structure will take effect in mid-2009 and after that point, a new line of four of five smartphones, probably running Android, will be launched in close collaboration with the two partners (Motorola hopes), ready for the holiday season run-up next year, and possibly some signs of recession lifting. But if the promised new smartphones are really as “exciting” as Motorola claims, it may prove short sighted to restrict distribution in advance, as a measure to cut operational costs, without ensuring the good terms that handset makers usually manage to extract from their exclusives. However, in a year’s time the luster may be fading on O2’s iPhone deal and if Motorola can deliver the goods in terms of a killer handset – highly debatable given its post-RAZR track record – this may prove a wily strategy. For now, though, it looks like an admission of defeat in Europe and a relatively short cut to reduced overheads in the Nokia-ruled region. ###
- Eric - |
