Motorola returns, again
Motorola returns… again. This will be third or second return of world`s first mobile phone manufacturer.
The power of brand is hard to overestimate, consumers want to buy branded products and they are sure that brand means quality. The greates example is HMD and how they relaunched Nokia brand. I can make a bet, that if they launched smartphone under their own brand (or try to invent another), it didn`t gain any attention and will be considered as one more Chinese manufacturer. But as they used Nokia brand, they made a lot of people really trust that they are buying Finnish phones, not Chinese. This strategy is well-known and previously was used by companies that acquired Alcatel and Philips. Even now, if you ask people the origin countries are France and Netherlands, but truly under these brands are hidden Chinese manufacturers.
Let me tell some history. In 2011 company was acquired by Google for fantastic (as for company that experienced financial problems) sum — $12.5 billion. Google overpaid more than 60% over the market price.
One of the reasons, why Google acquired Motorola might be a great stack of patents, because Martin Cooper created first mobile phone and due to this Motorola possessed a lot of patents that relate to almost any smart device.
In 2014 Google sold Motorola to Lenovo, the price was $2.91 billion. At the deal’s closing, Lenovo payed Google $660 million in cash and $750 million in stock, while the remaining $1.5 billion will be paid out over three years quarterly, so the deal will be finally closed in 2017.
Motorola returns in 2016
When Lenovo acquired Motorola, they also got R&D centre which was in charge of designing Motorola devices. This situation led to doubling of staff, but the different approaches and views on phones didn`t let to combine the power of two centres. Different worldviews did not allow the centers to experience the advantages of ‘synergy’.
In 2016 Lenovo launched manufacturing of their phones in their Wuhan factory, instead of outsourcing to other companies.
Analytics said, that this move led to a sufficient increase in prime cost. Also, in 2016 Lenovo launched new Motorola models, but their sales actually failed. Lenovo wasn`t able to manage two brands, and 2016 was bad both for Lenovo and Motorola.
Motorola relaunched, again
Lenovo decided to go all-in and abandon manufacturing phones under their own brand and concentrate on Motorola.
Company will concetrate all market efforts on revival of Motorola brand, but I think that it will take more than a year. If in case of Nokia, people have real nostalgia for this company, in case of Motorola, people think that this brand is already dead.
There will be 5 product lines, with different slogans:
Z: Unlimited Capabilities, flagmans
G: Unlimited Premium, well-designed and of a high quality
X: Unlimited Perfection, middle-priced
E: Unlimited Value, optimal choose for ‘typical customer’
C: Unlimited Essentials, low-priced models
Models Z and X will also support Moto Mods, accessories that are sticked to the back pannel.
I think, that it is a step of despair, when management don`t know what to do and they try to justify a purchase. The main problem is brand perception, people don`t trust this brand and feel it as ‘voice of the past’.