With Razr2, Motorola Returns To What's Worked Before

Functionality wins over good looks in company's new device lineup.
CEO Ed Zander is on a mission to turn Motorola around for a second time, having done it a little more than two years ago with the sleek Razr phone. He'll try to do it with a slim, feature-packed new device called ... the Razr2.

Like an NFL general manager who re-signs his star offensive tackle rather than draft a flashy quarterback, Zander is sticking with the product that sold more than 100 million units and radically changed cell phone design since its introduction in 2004. In fact, Zander declared at a strategy briefing and launch event last week, Razr "is not a product, it's a brand."

By choosing to stick with the brand rather than producing another revolutionary device, Zander sent the market a message that Motorola is focused on blocking and tackling.

Motorola patents device with a scent-release feature

Motorola patents device with a scent-release feature
The blogosphere mostly yawned at Motorola's new lineup of high-end devices. The Razr2 comes in three versions, one for third-generation HSDPA networks, an Edge variant for Asian and Latin American markets, and a CDMA version. The Razr2 is rugged--Zander slammed one on a hard surface to demonstrate. And its new ARM processor is 10 times faster than the original Razr's.

Other new models are the Z8 multimedia phone and the Q9 and Ming smartphones. All of the devices were previously announced. There was no word on which carriers will support them or when they will become available.

Most of Motorola's ultrafast multimedia phones will be available only in Europe and Asia, at least to start. A big reason for that is wireless carrier support. The major U.S. carriers have upgraded their networks to 3G technology, but 3G networks are not as widespread in the States as they are overseas. The only U.S. network on which the Z8 and the 3G version of the Razr2 will run is AT&T's bandwidth-limited HSDPA system.

After delivering disappointing financial results, Motorola needs a hit. Last month, the phone maker reported a net loss of $181 million on sales of $9.4 billion for the first quarter of 2007. Motorola is being pressured by high-profile new devices like Samsung's BlackJack, Research In Motion's BlackBerry Pearl, and the upcoming iPhone from Apple.

Expressing confidence in the future of advanced wireless networks that are barely up and running in the United States, Zander is refocusing Motorola's strategy on three key areas: Linux/Java, 3G cellular technology, and multimedia and messaging. The GSM/Edge version of the Razr2 sports a cool Linux-Java hybrid operating system, while the HSDPA and CDMA devices come with Motorola's old Synergy platform.

The Z8 is a powerful converged device, with superb video quality, a fantastic screen, and superior multimedia lifestyle applications, including the full-length movie The Bourne Identity preloaded on a microSD card. Packaged in a unique "kick-slider" form factor, the Z8 boasts features for not just consuming but creating, sharing, and uploading video and photos. Bloggers be damned, Zander is taking Motorola back to its R&D roots and focusing on the devices' innards rather than their outward appearance.

Zander has "thrown down the gauntlet," says Info-Tech Research Group analyst Carmi Levy. Zander is responding to rivals by saying Motorola isn't going to cede its position in the marketplace and that it's going to continue to fight for market share as the world evolves toward converged devices, Levy says.

If it doesn't work, this back-to-the-future strategy could be Zander's undoing. From January 2001 to July 2002, when he stepped down as president and chief operating officer at Sun Microsystems, Sun's market capitalization fell 86%. Motorola's initially rose under Zander's watch, powered by the Razr, but the company's stock is off 30% in the past seven months and its share of the cell phone market has declined.

Some repeat performances are sought after--others are to be avoided.