Motorola to continue focus on cheap handsets

Motorola, the world's second largest mobile manufacturer in the world, plans to continue to offer cheaper phones in the emerging markets even as there are reports that it may register losses in its first-quarter results and cut its sales forecast.

This, despite the fact that the company's discount on 3G phones and focus on cheaper phones have impacted its profits, in spite of having 17 per cent growth in the sales.

A company spokesperson, in its email response to Business Standard, said, "We will continue to participate in the emerging markets. Motorola is committed to improving the financial performance of the mobile devices business by pursuing market segments and product tiers that demonstrate the best opportunity for high gross margins and meaningful profitability. In this regard, the company is focused on steps to reduce cost and improve consumer experiences."

The company has undertaken some steps to improve its performance, including deploying open standards Linux/Java(TM) software across mid- and high-tier devices to enhance experiences on handsets, accelerating a more cost-competitive silicon strategy, shifting the marketing approach to include experience as well as design as a product value proposition, improving product design processes to achieve competitive price points among others.

According to the TNC CellTrack 2006 report, Motorola's performance in the Indian market has improved significantly. Its share have almost doubled from 3 per cent in 2005 to 7 per cent in 2006. However, it has lost market share up to 4 per cent in the CDMA segment in India.

To strengthen its position, it recently announced the availability of three new CDMA handsets priced under Rs 3,000. These handsets will be available through Tata Indicom's distribution network of more than 60,000 retailers.

Meanwhile, Motorola has also increased its focus on India for its research and development works. The company, which opened its first R&D lab in India in 1991, now owns six R&D centres in India, spread over Bangalore and Hyderabad and employs more than 2000 people.