How Motorola missed a huge opportunity


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50 million devices sold (as of July 2006)

A part of pop culture around the world

Highly functional electronic gadget

iPod? Nope. Motorola's RAZR. So how can a product that is so wildly successful be threatened so easily? It's not just the iPhone that will be stealing the sexy from Motorola, but new phones from other companies like Nokia and Sony. After a few years, and gaining a huge segment of the market the RAZR is being made almost irrelevent in the modern cell phone marketplace. How could Motorola let that happen?

My answer is that they didn't turn the RAZR into a platform. The iPod is the best example of this. The iPod itself is pretty darn good, but there are very worthy competitors to it, and yet it achieves almost total domination in the portable media player industry. That's because Apple developed an entire ecosystem of products and services that revolve entirely around the iPod that extend, enhance, and fill in its capabilities. There are literally hundreds of accessories that you can buy for your iPod. There's also the whole iTunes service.

Both devices have an active hacking community around them, but this isn't enough. Motorola never really encouraged the development of these enhancing services. There is no Bluetooth headset that works specifically with the RAZR and matches its form factor. There's no RAZR specific software that is easy to use and manage. There's no online address book service that works specifically with the RAZR/Motorola. Obviously a lot of the reason for this is due to the carriers and all kinds of different operating systems, but now Motorola is in a very difficult position.

By not capitalizing on their former success there is absolutely no switching cost involved in choosing another phone. Now Motorola has to continually fight in the ultra-competitive market on exactly the same footing as every other cell phone manufacturer. They got lucky once with the RAZR, but will they be able to strike gold twice when the competition is twice as fierce? It doesn't look likely.

This serves as a lesson to all CE companies. You can't design your product with the goal of it becoming massively successful and gaining an ecosystem, because if it doesn't, the product ends up being way worse. BUT be prepared for massive success! Be prepared to develop your product into a platform that makes the product even better and at the same time builds loyalty for your customers so don't switch.

With 10 days left before the iPhone bomb drops, it might be too late to go after the high end market. But the RAZR is still pretty darn popular as it moves into the cheaper market, so it's not too late to develop the platform. And make the RAZR2 have the same benefits so an original RAZR user has a very clear upgrade path.

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You forgot to mention the Blackberry Phones by RIM, they are very functional, look good and offer better value than the I Phone
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The Blackberry is definitely more in peril than the RAZR. If all you care about is a phone, you're not going to get the iPhone but as soon as you want more PDA-like functionality, you're going to have to decide (and if price isn't a factor) between the 2 major players - iPhone and blackberry. It's kind of funny that I already consider the iPhone a major player, considering it hasn't been released yet. I guess we'll find out what the response is soon enough, but according to the CEO of AT&T, he's in love with the iPhone [link].

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I actually don't think the Blackberry is very threatened by the iPhone. The iPhone is all about the chique factor and gives up on some functionality. There are things like push e-mail that are literally battle tested that the iPhone just doesn't offer. That's why the RAZR has way more to lose since it's all about the chique factor and looking cool.

Thinking about it now, I actually wouldn't be surprised if sales of smartphones in general go up. The iPhone is awesome, but it's not RIDICULOUSLY awesome. Ok maybe a little bit. But there are other devices that do comparable things as the iPhone and at a cheaper price. Apple is bringing a lot of attention to the whole smart phone category and there will be people that go with something other than the iPhone.

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True about the smart phone thing. I also think a lot of RIM's majority of users (military, politicians & business people) won't switch from a reliable machine that they've deemed the crackberry. I could see it appealing more to the female demographic and web-world.

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I personally never liked the RAZR. I still haven't found a good, basic, phone that I like a lot in the way of user interface and functions. My phone is fine user interface wise, but it can't do anything. It doesn't even have a camera. The RAZR didn't pull of the user interface well in my opinion, and I think it is way over-rated. And now you can get it for about $10 when you sign up for a plan. So much for that.
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The UI on the RAZR is probably the most annoying/useless thing about it all. And that's coming from someone who's razr is pretty much falling apart. There are a TON of problems with the thing, and very few redeeming qualities other than the ultra-sexy form factor which, I admit, I still love. I'm hoping the same thing happens to smart phones that they start out expensive and just get pushed cheaper and cheaper until eventually a few years from now we can pick up an iPhone or some competitor (Asus P535) for free with a contract.
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i thought i pod was apple? 

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