Motorola (MOT) has its groove back in the global wireless and broadband communications arena. And nowhere is that truer than in China, a vast and critical mobile phone market. Not only is the world's No. 2 mobile-phone maker's lineup of RAZR, C11x, and C139 handsets doing well there, but now a svelte 122-gram smart phone and personal digital assistant combo—launched in early February, branded in China as the Ming—has taken the mainland by storm.
The Ming has helped Motorola pull off a remarkable market share grab in the Chinese mobile phone market, one of the most competitive on the planet, where 150 local and foreign brands vie for business. Motorola's share of the overall cell phone market has jumped from 12% in May, 2005, to around 21% through the first five months of 2006, compared to market leader Nokia's 30%, according to figures compiled by Sino Market Research.
And in the high-margin, fast-growing smart phone market (hybrid digital devices that blur the lines between high-end mobile phones and a PDA), Motorola controls about 50% in China, well ahead of its arch-nemesis Nokia.
THE IT PHONE.The pen-based Ming smart phone, which retails for about $475 on the mainland, is aimed at business professionals on the go. It has clearly hit the mark by quickly establishing itself as the best-selling smart phone on the mainland, in Hong Kong, and in Taiwan. At the end of May, the Ming had grabbed 1% of the entire mobile phone market (including smart phones) on mainland China. The entire market added up to about 110 million or so units as of the end of May.
"It is the device to be seen with in China," Motorola CEO and chairman Ed Zander told analysts during a recent second-quarter earnings conference call in which he discussed the company's record results (see BusinessWeek.com, 7/26/06, "Motorola Shows its Mojo").
Motorola has aimed the Ming at young business execs aged 25 to 35, who prefer a gadget with high-powered functionality as well as a cool, edgy design. Motorola's advertising strategy is certainly focused on developing some provocative buzz for the smart phone: One Chinese-language Ming print ad features a split image of an attractive Western model in both business attire and a dominatrix costume.
MY PHONE FRIDAY.Yet what has really triggered a heat blast of consumer desire is the Linux-based operating system and Ming's excellent Chinese-character recognition software, which makes text-messaging a snap.
Another killer feature driving the Ming's success: a two mega-pixel camera with a business card reader function that seamlessly stores names, phone numbers, and e-mail contact information. The Ming is also packed with high-end multimedia features typical of high-quality mobile handsets such as a digital music player, a video camera, and FM-stereo.
"It is amazing the uptake the Ming has had," says Ian Chapman-Banks, Motorola's head of marketing for mobile devices in North Asia. The smart phone is being rolled out to markets in Southeast Asia and will be available in South America by the end of 2006. There are no plans for Europe or the U.S. right now.
BIG TICKET.The Chinese market for smart mobile devices—wireless handhelds and smart phones—is expected to hit 6.7 million units by the end of the year. That represents a fraction of the much larger market for regular mobile phones, some 110 million units. Still, holding a dominant position in the Chinese smart phone market is a good place to be right now.
Smart phones command premium prices in the $500 range, vs. $200 for high-end mobile phones and $60 or so for stripped-down handsets that basically just allow one to make calls. "You are able to charge these higher, premium prices," says IDC Beijing-based senior analyst Manny Lopez. "Motorola is doing extremely well with the Ming device in terms of price."
IDC also forecasts that the market for smart phones—which you can plug into PCs to download new software applications from the Net as well as e-mail, phone contacts, and online games—will enjoy an explosive 20% compound annual growth through the end of the decade. Today, it's about a $2.2 billion market, says Lopez.
GOOD GAMING.In the global smart mobile device arena, the picture is far different. Motorola controlled an 8.4% market share at the end of the second quarter, vs. a dominant 47.7% for Nokia, according to London-based research firm Canalys. However, Motorola overtook RIM (RIMM), Sharp (SHCAY), and Palm (PALM) to secure the No. 2 slot, and saw its market share nearly double from the year-ago period.
Back in China, Motorola has made some recent pairings with Chinese players to extend its reach even more. On July 28, the company announced a tie-up with the mainland online gaming company, Shanda Interactive Entertainment (SNDA).
The alliance includes launching exclusive versions of Shanda's popular World of Legend and Magical Land role-playing games on customized versions of Motorola's E680g handsets. Motorola also signed a pact with Huawei Technologies of China to develop and market high-speed wireless equipment to telecom companies in China and elsewhere.
At the moment, though, the Ming smart phone is Motorola's star performer in China. On the mainland, the Ming uses the Chinese character that is defined simply as understanding or visionary. For Motorola, a better translation might simply be: cash machine.