Motorola Counts on New-Generation Wireless Phones
Fri Feb 15, 4:33 PM ET
By Ben Klayman
CHICAGO (Reuters) - Wireless technology giant Motorola Inc. this week introduced a range of new wireless telephones, including one of the industry's first third-generation models, that it hopes will add fuel to its recent resurgence in the global handset market.
The Chicago-area based company unveiled on Thursday at a company design center in Milan, Italy, five new wireless phones, three existing models with enhanced technology and several accessories to provide additional entertainment and functionality.
Motorola, which ranks far behind Finland's Nokia (news - web sites) as the world's No. 2 maker of wireless phones, has lost market share over the past decade to Nokia's sleek and popular phones.
Motorola's stock closed off 41 cents, or 3.12 percent, at $12.74 on the New York Stock Exchange (news - web sites) on Friday.
In recent quarters, Motorola has returned its wireless phone unit, or Personal Communications Sector business, to profitability and boosted market share with new models.
It said it had about 17 percent of the global handset market in the fourth quarter of 2001 -- half of Nokia's leading share -- and has targeted 25 percent long term.
"Anyone who tracks our industry will recognize the new direction represented by our 2002 portfolio," Mike Zafirovski, president of Motorola's handset business, said in a statement. "Design, style, elegance, entertainment and overall experience -- these are all the hallmarks of a renewed and refocused Motorola PCS."
COUNTING ON SLICKER DESIGNS
Motorola is counting on the new models, with slicker designs including one with a rotating cover and circular display and such innovations as color screens, to increase pressure on Nokia and other competitors. However, other handset makers, including Nokia, Sony Ericsson (news - web sites) , Siemens AG (news - web sites) and Philips Electronics , are also launching new handsets.
The wireless industry desperately needs new types of services to jump-start growth this year after a miserable 2001, when the number of handsets sold fell for the first time.
The new models were not enough to prompt Lehman Brothers analyst Tim Luke to change his "neutral" rating on Motorola's stock, citing the tough market.
"While we remain encouraged by these initial product introductions, we believe that visibility on full-year market-share opportunities and margin improvement on handsets continues to remain somewhat limited," he said in a research note.
Nokia has said it will start selling phones with built-in digital cameras and a big color screen in the second quarter. These will enable consumers to send and receive digital pictures with text attachments -- a service called multimedia messaging service (MMS).
MMS builds on the unexpected success of Short Message Service, which has grown to a billion-a-day text-messages market in just a few years.
Nokia says it is not worried, despite an avalanche of recent announcements from wireless carriers postponing the commercial introduction of so-called 3G, or third generation mobile networks. It expects to start shipping 3G phones in the third quarter and sell them by the millions in the fourth quarter.
Japan is already using 3G technology, which is not catching on as fast globally as some industry observers first predicted.
Motorola's new portfolio includes Java-enabled handsets, allowing users to add applications to their mobile phone. The new models will be introduced at various times over this year.
Several handsets in the new portfolio provide either enhanced or MMS technology, adding audio, graphic, text and imaging content to short messages. Additionally, they offer faster data and Internet connection speeds through GPRS, or General Packet Radio Service, technology.
Motorola also introduced one of the industry's first 3G products, offering faster, "always-on" Internet connections and moving image services. It will deliver models to Hong Kong-based Hutchison Whampoa Ltd. in the third quarter.
Among the accessories Motorola introduced were an MP3 player, Bluetooth headset and car kit, desktop speaker phone, and retractable and one-touch headsets. Bluetooth is a wireless connectivity technology for linking laptop computers, wireless phones and other devices.
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