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Design That Moves Business: The Motorola RAZR Effect (Part 3)

Posted on Saturday, Dec 13th 2008

By guest authors Charles W. Bush and Kathy Hwang of 3Strand Innovation, a brand, design and business consultancy

What happened after the RAZR?

The RAZR has sold over 50 million units to date and was named #12 of the “50 Greatest Gadgets of the Past 50 Years” by PC World magazine. It pushed Motorola’s stock up at least $10 a share and brought the company a new brand of innovation and edginess. And it did this in relatively half the time that it took Apple to get its iPod off the ground. However, on June 23, 2008, the company’s stock hit a five-year low of $7.44 a share. With the current economic woes, they’re now sitting around $4 a share. What happened to the company that was defining innovation on the mobile phone market in 2004?

Motorola manufactures about 14 separate series of cell phones, each with up to 10 separate models a year. For simplicity’s sake, we take a look at Motorola’s 4LTR product line (e.g. RAZR, KRZR, PEBL) to get a better understanding of their more recent design challenges. This mobile phone line is the one developed after the introduction of the RAZR and still represents some of Motorola’s most stylish phones. The chart below shows the progression of Motorola’s designs. There have been incremental design changes from 2004-2008, but nothing disruptive or game-changing. What started with doing the “impossible” quickly migrated into “safe” territory.

In February of this year, BusinessWeek reported that Motorola was starting to explore the option of selling its mobile phone business. Even more surprising was the fact that the company had fallen so much, that Motorola had few companies biting at the opportunity to own the once-giant in the field.

From an innovation point of view, Motorola does seem to be stunting its own growth. Its offerings are no longer pushing boundaries. Its GUI (graphic user interface) has been accused of being archaic and closed in comparison with new alternatives like the iPhone. Even its newest touch screen KRAVE has been described by the same PC World as lacking “interesting applications [leaving the user] wanting a lot more.” In comparison with other offerings, “KRAVE’s software feels old—functional but stale.”

Motorola is a huge company whose problems can’t be pinned down to just one or two flaws. In the past four years there have been management changes, layoffs, part shortages and falling market share. Nokia has taken over the low-end cellphone market while Sony Ericsson is quickly gaining market share with high-end units, as are incumbents such as the iPhone and new offerings such as the Android from Google. The ironic thing is that according to Information Week magazine and the online rating company AdMob, the RAZR is still the number one handphone in the USA.

Bruce Nussbaum, a BusinessWeek managing editor who covers design and innovation, claims the Star-Tac (Motorola’s success in the 1990s) and the RAZR were flukes from skunkworks projects. But if they got it to work before, then why not again? It’s hard to image that a company that still has the number one cell phone can’t continue to be innovative, but maybe the game has changed. Maybe a company like Motorola can no longer get by on technology alone. A new touch screen won’t cut it unless the phone also has the styling, interface and applications that touch customers.

The 50 Greatest Gadgets of the Past 50 Years
“Motorola Splits in Two–Why The Razr Was a Fluke and What The Company Needs To Do Now.”

This segment is part 3 in the series : Design That Moves Business: The Motorola RAZR Effect
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