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4/12/2011
05:12 PM
Eric Zeman
Eric Zeman
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Will 4G Spur Motorola Xoom Sales?

The Motorola tablet appears to be headed to Sprint's 4G network with WiMax in tow, but can 4G help sagging Xoom sales?

Analyst reports, channel checks, and the complete lack of any hard numbers from Verizon Wireless and Motorola together suggest that the Motorola Xoom tablet isn't selling all that well. Last week, several analysts came down hard on the Xoom, saying that Motorola has sold just 100,000 of the Android 3.0 Honeycomb tablets.

In particular, Pacific Crest analyst James Faucette labeled sales of the Xoom as "disappointing." His research led him to cut Motorola's revenue and earnings projections for the rest of the year and into 2012.

"Based on our checks, we believe overall sell-through trends for of the Xoom [has] been disappointing," he said in a note to his clients. While Verizon Wireless and Motorola both say the Xoom is selling well, it's not the door-busting success that Apple's iPad/iPad 2 have been. (The original iPad sold more than 15 million units in its first year of availability. Apple hasn't said how many iPad 2s have been sold.)

This begs the question, what could help invigorate Xoom sales?

Reports have suggested for several weeks now that Motorola is building a version of the Xoom for Sprint's network. New evidence--in the form of Xoom accessories showing up at Sprint retail stores--practically confirms that Sprint will offer the Xoom.

Adding a distribution channel certainly won't hurt Xoom sales, though it is already pretty widely available. Configuring the Xoom to adjust from Verizon's CDMA 3G network to Sprint's CDMA 3G network is a no-brainer for Motorola, and an obvious move to make. Those customers loyal to Sprint who are looking for a tablet other than the iPad 2 will surely snap up the Xoom instead.

What about a healthy dose of 4G?

We know that the Xoom will be receiving a 4G upgrade from Verizon Wireless in the form of a Long Term Evolution (LTE) module. The upgrade will require users to send their Xoom's in for an upgrade that will take about a week. Once installed, the LTE module will give the Xoom access to Verizon's brand new 4G network and its incredible mobile broadband speeds. The problem is that this future LTE upgrade doesn't appear to have been a factor in initial sales success for the Xoom.

Can WiMax have an impact? Doubtful. While it makes perfect sense to offer a WiMax version of the Xoom to Sprint, Sprint's WiMax network hasn't helped Sprint recapture the customers it has already lost to AT&T and Verizon Wireless.

Let's not forget that the Xoom is also available without 3G/4G entirely, offering only Wi-Fi for internet connectivity. It went on sale March 27 at a large number of big box stores and online distribution points, including Amazon.com, Best Buy, Costco, RadioShack, Sam's Club, Staples, and Walmart. For enterprise buyers, Motorola is distributing the Xoom via commercial IT channels and regional retailers through a distribution agreement with Synnex Corporation, and regional carriers through Brightpoint, Inc.

The sale price of the Wi-Fi only Xoom is $599. It includes 32GB of storage, which puts right in the same ballpark as the 32GB Wi-Fi iPad 2, also $599. It doesn't require a hefty, two-year data contract.

The Xoom comes in a wide range of wireless radio configurations that cater to pretty much any budget. If it's not the network that's dragging down Xoom sales, what is it?


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