Motorola Tuesday said its mobile phone revenues fell by 51 percent in the fourth quarter of 2008 and said it plans to improve phone sales in 2009 by developing fewer new handsets with a focus on smartphones that run the Android operating system.
The focus on Android will give Motorola a chance to capitalize on handsets that integrate social networking functionality, which is expected to sell well in the market, Motorola Co-CEO Sanjay Jha said in a conference call Tuesday morning.
By the same token, the Android news is not good for Microsoft's Windows Mobile operating system. Motorola plans to build handsets in 2010 that will run Windows Mobile 7 when it becomes available, bypassing Windows Mobile 6 which is available now, Jha said. The fourth-quarter earnings announcement did not surprise analysts, as Motorola last year began laying off 7,000 workers to lower costs, with 1,000 already let go, Motorola officials said.
In general, Jha said Motorola will make fewer launches of new mobile phones in 2009, with a greater focus on mid- and high-tier phones. Analysts have said a big part of the Motorola losses were due to flatness in sales of low-end phones, partly due to the poor global economy and the poor performance of mobile phone sales. Because Android already has thousands of developers and won't require Motorola to build an operating system from the ground up, Motorola will be able to deliver a "differentiated" version in what promises to be a competitive market for both smartphones in general and Android phones, Jha said.
Also, Motorola teams have had years of familiarity with Linux Java, which will help in working with Android, Jha said. Jha estimated that up to 40 percent of development staff at Motorola are devoted to smartphones, and noted that with prior successes like the Moto Razr phone, "we have world-class design capabilities."
For all of 2008, sales at Motorola were $30.1 billion, down from $36.6 billion in 2007.
The other two divisions at Motorola had different outcomes in the fourth quarter. Phillip Redman, an analyst at Gartner, said Motorola needs a full breadth of mobile device offerings, not just low-end devices, which have not sold well.
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