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Monday, May 9, 2011

Motorola Xoom, Droid Bionic Gaffes Raise Red Flags

Motorola was a darling after it launched the Droid in November 2009, but now it is stumbling in the face of mounting competition from Apple's iPad and iPhone.

Motorola Mobility ramped sales 22 percent for the first quarter 2011 and shipped 4.1 million Android smartphones, but it can hardly be said to be in a comfort zone.

For one, the company's Motorola Xoom, the first tablet to use Google's new Android 3.0 "Honeycomb" operating system tailored for tablets, was characterized as rough, unfinished and difficult to use by some analysts and experts comparing it to Apple's market-defining iPad.

Motorola said the Xoom sold 250,000 units for the first quarter, while the iPad shipped 4.7 million units in the last quarter.

Motorola disappointed analysts last month when it said its second 4G Android phone, the Droid Bionic would be pushed back from a second quarter release to the summer.

These happenings beg the question: is Motorola sacrificing quality for the sake of being first to market? If this is the case, it makes absolutely no sense.

Look at the Xoom issue. With 80 percent-plus market share, there is no catching the iPad or iPad 2 in the near term. Gartner Research analysts reasoned Android tablets could cut Apple's share to 47 percent but not until 2015.

There was no reason to rush the Xoom to market when Motorola could have crafted the slate to differentiate from the iPad in a way that made people feel they had to buy one.

Perhaps same could be said for all Android tablets, including the LG G-slate. Forrester Research analyst Charles Golvin noted all of the Android tablets have underperformed in the market so far.

Gartner analyst Ken Dulaney told eWEEK the Xoom is a good solid product. "I just think that the iPad has the market lead and people today can't see a reason NOT to buy an iPad."

Global Equities Research analyst Trip Chowdry polled several early Xoom users and visited several Xoom retailers to come to the conclusion that the Xoom is a weak product compared to the iPad.

As for the Droid Bionic, Motorola said the handset's hardware and software require a refresh.

EWEEK suggested Motorola desires to better compete with the popular HTC Droid Thunderbolt and the forthcoming Samsung Droid Charge on Verizon's 4G LTE network.

Forrester's Golvin agreed, noting that Motorola didn't feel its product was adequately differentiated in the market today against the other LTE phones and decided to invest in improving it so that it would be.

"I would expect them to focus on the OS (as you suggest) as well as battery performance; NFC is possible but that is not a feature that means much to consumers yet," Golvin added.

Chowdry said Motorola has grown more reactive since Apple's January launch of the iPhone 4 on Verizon, the same carrier that helped push Motorola and Android into the limelight with a $100 million marketing campaign for the Motorola Droid.

Indeed, Verizon for 15 months was the flagship Android supporter. The positive reception of the iPhone caught Motorola off guard. Now the company must retrench and regroup against not only Apple's innovation, but those of its Android rivals in Samsung and HTC.

"Motorola may have missed the demand for 4G and if you look at their software add-ons to Android they pale in comparison to HTC and Samsung," Dulaney said. "They have tiny icons and a battle ship grey background. They need to understand the presentation of their products in the store. Or they will lose sales."

With no Droid Bionic on tap in its second quater, it will be interesting to see if Motorola can continue selling millions of Android phones versus the Verizon iPhone and popular Android handsets such as Verizon's Thunderbolt, T-Mobile's Sidekick 4G and Sprint's forthcoming Nexus S 4G.


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