Motorola exploits Razr's edge

August 24, 2006|By Mike Hughlett | Mike Hughlett,Chicago Tribune

CHICAGO -- Remember the Knack? A monster hit called "My Sharona" catapulted the band to fame in the late 1970s - briefly. The Knack couldn't follow up, and quickly descended to trivia fodder.

The flubbed follow-up? The business world is littered with them.

Motorola Inc., of Schaumburg, Ill., knows this only too well: Its StarTAC mobile phone in the late 1990s was a smash, setting a new design standard. But Motorola couldn't sustain the momentum, and went into a tailspin that ended only within the past two years.

A key ingredient in that change in direction: The Razr, a mobile phone that has attained rock-star status in the gadget world, right up there with Apple Computer's iPod music player. Ten-year-olds may not know Thomas Jefferson from George Jefferson, but they likely know and covet the Razr.

So what does Motorola, the world's second-largest mobile phone maker, do now to stretch the Razr's reign? That's the question on the minds of a lot of Motorola watchers.

Motorola put them at ease last month, unveiling several new phones, all capitalizing on the Razr's winning theme of thin. Essentially, the company is doing what Apple did with the iPod: Trot out the core concept in different flavors.

"They are nicely moving ahead," said Roger Entner of the tech research firm Ovum, echoing other analysts.

"`Thin' is the [Razr's] differentiator, so you run that [theme] into the ground."

The Razr made its debut in November 2004 to rave reviews from gadget critics, who lauded its sleek design. Priced initially at $499 and available exclusively through one wireless network, it was snapped up by cell phone geeks, but not the masses.

Its price was lowered about seven months later - a common strategy in the phone business - and by the end of 2005 the Razr was available at several carriers. Now the Razr is priced at $70 to $100 with a service contract.

As the Razr became more of a mass-market product, sales soared, helping Motorola grab market share in the rough-and-tumble mobile phone business.

Last month, the company announced it had shipped its 50 millionth Razr. That means there are about as many Razrs in consumers' hands as there are iPods.

Motorola's rivals have either launched ultra-thin phones in the past few months, or plan to do so very soon.

To counter the competition, Motorola has been broadening its Razr offerings for the past 12 months. The phone has been made available in several colors. Plus, Motorola launched the Slvr (pronounced "sliver"), a one-piece "candy bar" model fashioned after the hinged, or clamshell, Razr.

Motorola recently went several steps further. It rolled out a new version of the Slvr and two more technically sophisticated Razrs, both geared for advanced, high-speed phone networks in Europe and Asia.

The company also unveiled the Krzr (pronounced crazer), which features a particularly lustrous exterior finish, and the Rizr, a Razr-like phone that has a cover that slides over the keyboard, rather than on a hinge.

"I get asked, `What's after the Razr?' And I say more Razrs, " said Edward J. Zander, Motorola's chief executive, at the company's annual analysts' conference in July. "But it's true. It is something we are going to continue for quite some time."

Plus, the company is pursuing an even thinner look with a new phone line dubbed Scpl ("scalpel"). The first of the Scpl portfolio, due out later this year, will be called "Motofone," and will be an inexpensive model aimed at mass markets.

While Scpl is a different platform than Razr, it has the same ultra-thin, sleek appearance. In fact, the Motofone looks sort of like the Slvr.

But keeping a product line alive for years in the cell phone industry will likely be a bigger challenge.

Product cycles for mobile phones can be measured in months, unlike game consoles, which can endure for years. The Razr, while still selling well, is already elderly by cell-phone standards.

Plus, the Razr's competitive edge is primarily based on form - its thinness - not on function such as game consoles, Rubin said.

Functions can be made more sophisticated. But "it's going to be hard to expand beyond the notion of thin," Rubin said.

The iPod also may have a leg up on the Razr in sustaining its fame. That's because of iTunes, Apple's popular online music store.

The Web site offers iPod users an easy end-to-end solution to download and play music.

"I don't think [the iPod] would have been successful without iTunes," said Pradeep Chintagunta, a marketing professor at the University of Chicago's Graduate School of Business.

Chintagunta pointed out another possible problem for Motorola: going too far with quirky four-letter names for phones. "The strategy of dropping vowels won't last forever," he said.

The Razr moniker was a refreshing change from the forgettable names often given to cell phones and it fit the look of the product and the edgy marketing campaign. But Krzr or Scpl?

"I was looking at the Krzr," Chintagunta said, "and I thought, `What does this mean? Is it crazier than the Razr?'"

Mike Hughlett writes for the Chicago Tribune.

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