Motorola Xoom Not Zooming Off Shelves - InformationWeek
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11:07 AM
Eric Zeman
Eric Zeman

Motorola Xoom Not Zooming Off Shelves

The Android 3.0 Honeycomb tablet, the Xoom, isn't selling well. Neither is Motorola's Atrix 4G smartphone and its laptop dock, analysts said.

Analysts are raining bad news on Motorola lately over sluggish sales of some of its key products. The Xoom Android tablet and Atrix smartphone are being called out as poor performers, despite heavy marketing campaigns launched by Verizon Wireless and AT&T, respectively.

According to Pacific Crest analyst James Faucette's channel checks, sales of the Xoom and Atrix have been "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 and Atrix have been disappointing," he said in a note to his clients. "In particular, we believe Atrix's lower-than-forecast volumes are a result of the $49 iPhone 3GS and the HTC Inspire, which kept Atrix sales well below forecast in spite of the marketing focus put on the Atrix by AT&T."

The Atrix, which is a dual-core Android smartphone that has a laptop dock accessory, is an interesting concept. When placed in the laptop dock, it transforms into a netbook of sorts, and supports full Web browsing, movie playback, and native Android applications. It has a couple of problems. First, it costs $199. While that's a standard price for smartphones, competing against the $49 iPhone 3GS is indeed a tough sell. Worse, the laptop dock can be purchased for $500. Yes, $500. And it only works with the Atrix. (You can buy both together for $500, too.)

Faucette concluded that Motorola needs to "substantially differentiate themselves from the rest of the pack. If they fail to do so, we believe shareholders may be looking at another meaningful step down." I can't imagine Motorola differentiating itself any more than it already has with the Atrix. It is truly unique in today's landscape of Android devices. Still, its main selling point, the laptop dock, is just too costly. (Also, anyone remember how badly the Palm Folio failed?)

It probably doesn't help that AT&T sneakily left the HSUPA "4G" radio inside the Atrix 4G turned off, crippling upload speeds. In my tests of the device, it never exceeded 300 Kbps, which is just brutally slow. This has been widely reported -- and heavily criticized.

While Faucette doesn't provide any actual sales guesstimates for the Xoom, Deutsche Bank pegs the number of Xooms sold at just 100,000. It arrived at this estimate by checking the Android developer web site and tallying the number of devices using Android 3.0 Honeycomb.

Motorola and its network partners, AT&T and Verizon Wireless, haven't shared sales data for either the Atrix or the Xoom. They certainly haven't been screaming about the smash-hit status of either device.

While the Xoom and Atrix aren't perfect, they're not bad, either. I happen to think the Xoom is a solid alternative to the iPad, though I am less convinced of the practicality of the Atrix and its laptop dock.

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