Ups and Downs for Motorola, Sagem and Vitelcom

11th April 2007

Since we made our predictions at the beginning of the year, there have been three significant developments for mobile phone manufacturers.

Motorola

Things are looking grim for Motorola. The indications are that the Q1 2007 figures from the company will indicate a loss due to slumping mobile phone sales, and the loss of several prominent employees shows that this is a company in serious trouble.

The problem is obvious - Motorola is wedded to designing phones that look like the original RAZR and is completely in a rut when it comes to design. With the exception of some low-cost monoblock devices and some handsets that sell only in Asia, Motorola have produced endless variants of the same theme.

We recently tried to be positive about the Motorola W510 and failed as it is almost completely identical to the existing RAZR V3i. Recently Motorola announced the W395, W380 and W375 devices which.. you guessed.. are almost identical again.

The problem gets worse.. when Motorola announced the RIZR Z8 they saddled it with the same tired old design as earlier RIZRs. OK, so it's banana-shaped.. so what. We were harsh about the RIZR Z8, but it turns out to be rather a good phone. Underneath the dead-end styling that is. What the Z8 shows along with devices such as the ROKR E6 and the FONE F3 is that Motorola is certainly capable of being technically innovative. Even the somewhat unsuccessful KRZR K1 is a fundamentally good phone. But good or not, they all look too much like the RAZR, and the RAZR look is definitely out for 2007.

At launch the original RAZR V3 was a huge success - mostly due to it's iconic design. Originally the RAZR had a high price tag which meant healthy profits for Motorola, but as the phone got older then prices dropped and the RAZR become commonplace. By the launch of the upgraded V3i, the RAZR was badly out of date and it compared poorly with other handsets on the market.

When Motorola created the RAZR, they created a very desirable fashion phone. But they've tried to repeat the same trick over and over again, seemingly without realising that the RAZR is no longer fashionable.

In short, Motorola are demonstrating all the business agility of the Titanic heading inevitably towards disaster. We know that Motorola's crew are perfectly capable of turning the ship around.. but the captain seems to be determined to press on. And it turns out that Motorola's passengers - it's shareholders - are increasingly unhappy with the poor performance of the company.

We very much hope that Motorola will turn itself around soon.

Sagem

Sagem are another struggling business, and indeed one rumour was that Sagem would be taken over by Motorola.

However, Sagem has been thrown not one, but two lifelines. Firstly, rival Sony Ericsson announced that they would contract Sagem to build some of their low-end handsets, and then Vodafone announced a deal for Sagem to manufacture further Vodafone-branded handsets which should add distinctiveness to Vodafone's own brand device range.

Sagem can certainly innovate - the my750C has features that rival anything their big name competition can do, and the VS3 (one of our favourite phones) shows that they can design for specific markets quite well.

Even so, 2007 and beyound will be a struggle for Sagem in the face of manufacturer consolidation.

Vitelcom / Grundig Mobile

If Motorola is considered a first-tier manufacturer and Sagem is a second-tier manufacturer, then Vitelcom was always a third-tier outfit.. but one that showed promise.

Using their Grundig Mobile brand, Vitelcom previewed the Grundig B700 recently which looked to be a very promising device.

Sadly it looks as though the B700 will never reach production as Vitelcom has gone into administration with 400 jobs in Spain at risk. The problem? Simply that the order books were empty despite all Vitelcom's efforts to come up with a range of novel and interesting devices. Vitelcom's collapse is creating shockwaves in Spain, but it is unlikely that anything can be done to salvage the firm as a going concern.

Vitelcom is a demonstration of just how hard it is for mobile manufacturers to compete against the big names. Sadly, we expect to see many other small manufacturers follow suit.

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