Motorola Seeks More Efficiency, Better Handset Portfolio
Motorola must cut costs and be “boringly consistent” to fix business problems and gain on competitors, Motorola Chief Financial Officer Tom Meredith said Wednesday at the Citigroup Global Technology Conference in New York City. “Our inconsistency highlights that we were foolish,” he said. “We were accident-prone and need to fix that.”
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“Low cost always wins,” Meredith said. Motorola must cut costs, perhaps to the point of more layoffs, he said. The company has been erasing layers of management to “streamline cost structure,” he said. Motorola also recently dropped a policy preventing firings of people with the company from the beginning unless a founding executive officer approved, he said. Recent staff reductions hurt morale, but optimism is growing within the company, he said. Morale “may not be bright green, but we're not red or yellow either.”
Motorola knows it faces challenges in mobile, Meredith said. Motorola’s “hit” Razr handset is great, but Motorola must work on its handset portfolio, focusing on more than one or two devices, he said. Rivals have succeeded without flagship products like Razr because their portfolios are “filled” with strong devices, he said.
Motorola has struggled in Europe due to its portfolio, its leadership and a mistaken assumption that 3G would not take off until 2007, Meredith said. 3G ramped up in 2006, creating a “big mess” for Motorola, he said.
Motorola missed opportunities in the emerging Chinese and Indian markets when Motofone failed in them, Meredith said. China and India offer millions of customers willing to pay three times more for a phone than they were only four years ago, he said. But Motorola “did not truly appreciate how phones are being used in emerging markets” and “forgot” that its phone had to cost the least to compete with Nokia and other big emerging rivals, he said. Motofone’s lack of a color screen also hurt, he said.
The iPhone’s success has enhanced Motorola’s carrier relationships, Meredith said. The iPhone has eased carrier resistance to Wi-Fi and touch screens, and Motorola likes the high-tech phone’s price range, he said. Motorola touch- screen phones soon may be on the way to the U.S., he added.
The success seen by the iPhone and other rivals’ top phones stems largely from “exceptional” user interfaces, Meredith said, calling it “imperative that we as a company have a more simplified software strategy.” Motorola has too many software platforms, and in time will thin their ranks, he said.