The structure is there, the resources are in place, but the company is in dire straits. Is Motorola living on borrowed time?
Motorola has been beset by plenty of bad news lately. As global demand for new smartphone devices decreases, Motorola’s slice of the market has been in steady decline. As such the firm has reportedly entertained the idea of shifting away from manufacturing. While the company’s merger with Google has been a lifesaver, an uncertain future for the once-dominant corporation may lead to dramatic changes throughout the organisation.
Sales decline in the Asia/Pacific region
According to reports, Motorola is now responsible for less than ten percent of all worldwide smartphone sales. Rival manufacturer Samsung has taken over as the primary market shareholder, even though overall mobile phone shipments are declining. One of the reasons that Motorola’s sales are shrinking is the slower demand in the Asia/Pacific region for smartphones in general, which caused sales of mobile phones to drop for the first time since the spring of 2009.
The first quarter of 2012 saw total smartphone sales decline by two percent year on year. In response to these numbers, Gartner projects that smartphone manufacturers will sell up to 20 million fewer devices this year than in 2011.
Possible reasons for the slowdown
What is causing the slowdown in smartphone sales in Asia? According to a leading analyst, the cause is largely related to consumers who are waiting to purchase new devices until later in the year. “The first quarter, traditionally the strongest quarter for Asia – which is driven by Chinese New Year, saw a lack of new product launches from leading manufacturers, and users delayed upgrades in the hope of better smartphone deals arriving later in the year”, said one prominent economic analyst speaking with World Finance.
The Android smartphone market has become reached saturation point over the past couple of years. As more and more manufacturers join the arena, the pressure is on Motorola to keep up by creating new and innovative devices that stand out from the crowd. Originally, Motorola was at the forefront of the Android smartphone movement, creating the first DROID phone – an Android answer to the iPhone. Analysts have argued that the firm’s R&D departments have stalled, allowing for other developers to move into the market and offer better features at lower prices.
Whether or not Google’s purchase of Motorola will herald a new lease of life for the telecom outfit remains to be seen. But as is the case with large acquisitions of this kind, the process can be arduous at best; fatal at worst.