Motorola, or Moto as it is now, is far from a spent force. But it has rightly been called a broken brand, in need of a revival.
iTWire spoke to Danny Adamopoulos, senior director of Product Operations APAC/India who joined Motorola in 1999 and celebrates 18 years of continuous work with Motorola, to get an idea about how the brand is doing now..
If you are interested in the back story, iTWire has an article titled “Remember the great brand? Motorola Phones”. iTWire also has an exclusive interview with Danny Adamopoulos last October titled, “Hello Moto – I’m back”
Q. The Wall Street Journal has recently written an article titled “Lenovo thought it knew how to fix tarnished brands – then it bought Motorola.” The article inferred that its success with taking on the IBM brand may be hard to replicate. “We underestimated the differences of the culture and the business model,” said Yang Yuanqing, Lenovo’s chief executive.
Adamopoulos: I have read the article, it is WSJ’s take and it is more based on Lenovo smartphones (not Moto) have fallen from number three to number eight in China over the past two years. WSJ conveniently did not look too closely at what has been going on behind the scenes in the merger of the two companies. A lot of changes happen when you merge two large organisations and there is always entrenched culture clashes and resource reductions in the process.
First Lenovo decided to keep the brands stand alone, then decided after six months to unify its smartphone business under the one Moto brand. That takes time to implement, given Moto and Lenovo were in different markets, with very different products, and with different go to market strategies.
Lenovo is a late bloomer to the mobile industry, it has only been in the smartphone market since 2012 and was the number one Chinese brand in China by 2014. Its market model was mostly “online” – via telco carrier sales. It has its own app store and has had something like 130 different models or variations of handsets in that time. It was competing against more than 100 other manufacturers in this market.
Lenovo saw that Motorola is a premium brand with a long history and a good reputation for innovation and quality, and with the right strategy, it could capture more of the premium end domestically and internationally.
Yang stated at the time of acquisition, "Such an iconic brand, innovative product portfolio, and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones. Don’t be scared by the US$1 billion-a-year loss. We will improve that even from day one. Google is very good at software, ecosystems, and services. But we are stronger in the manufacturing of devices.”
Lenovo also received an extensive international carrier channel (part of Moto’s online strategy) that it could not otherwise get. Yang said that Motorola was purchased in large part due to its long-standing relationships with cellular network operators in the US and the UK. "There are lots of reasons why we bought Motorola, but primarily because it has a history of distribution in the US and UK. Motorola has long and established relationships with routes to market in North America and the UK, where people are tied to their network operator." The same is true in Australia.
Q. Why did Lenovo-branded smartphones decline so quickly?
Lenovo, like Apple, was too reliant on telco subsidies that disguised the cost of the handset. In mid-2015 the Chinese government mandated that carrier subsidies be phased out. Lenovo’s chief operating officer Gianfranco Lanci said at the time that, “Lenovo has been overly reliant on operator subsidies”, noting that 60% of its sales had come via telcos when the market rapidly switched to no-contract, outright purchase, low-cost models that suited companies like OPPO, vivo, and Huawei.
Lanci also said that Lenovo underestimated the time it would take to gain the benefits from the Moto merger.
Q. What is the strategy going forward?
First, our chief executive has stated that Motorola will be a solid number three in China and Western markets – no timeframe has been given, but let’s assume within two years.
It has built its own “six-sigma” grade factory in Wuhan, China, and that is vital to take on players like Samsung that control so much of its own supply chain. Motorola’s strategy is that with Lenovo’s supply chain expertise (speed, efficiency, and scale), and because it makes the products it sells, its QA will be better, it can respond quickly to market demands and will be a strong end-to-end brand.
Motorola will be in all three market segments – pre-paid, the value mid-range, and the premium flagship range. We may also look at enterprise, leveraging the Lenovo Australia PC enterprise team – it makes sense to have a product to complement the world's largest PC maker.
It has chosen to go to market solely under the Moto brand which has a stronger identity, quality perception, denotes a higher social status, and can be aspirational – all of which help to make it a viable choice over Apple or Samsung. Its US heritage is important as well.
Our current flagship range is the Moto Z series with its innovative Moto Mods – more on these later. It replaces the Moto X series although there is still a ShatterShield Moto X-Force in the market.
Our mid-range product is the Moto G series and the G5 is due to be announced at the Mobile World Congress. The G4 will become a lower cost option, and the G3 will be phased out.
Q. Moto Mods are the only true innovation I have seen in 2016 – how are they going?
Moto Mods is about understanding what the end user wants – not pushing out incremental revisions and updates to the same old products. They’re after something new. You can’t make a one-size fits all smartphone. What we’ve done with Mods is quite category changing. We think this is the next big thing.
Q. Will we see more mods at Mobile World Congress at the end of February?
Watch this space – we will announce lots of new Mods this year and our flagship Moto Z family moving forward will continue to support Mods.
Q. What about Moto Australia?
Motorola has always been fondly regarded as a premium “US” brand and we just need to rekindle that memory and remind Australians we are still here, the lights are on and someone is at home.
We have been through difficult times, we have restructured, and we now have the resources to go forward.
My focus in 2017 is to support the many retailers and convince their staff that Moto is every bit as good or better as other premium brands. Our new G5 series is the perfect mid-range device. We will back that with consumer demand campaigns.
We have solved the integration issues, we have some great products, we have shown innovation and we have a strategy that we are excited about and can begin to execute.