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Motorola’s Loss Is Apple’s Gain: That $2.1 Billion Sucking Sound Is Coming From The iPhone
Razr anyone? Motorola can’t even give those things away anymore. The once-proud company reported horrible earnings today, with sales down 21 percent and a net loss of $194 million. But the big takeaway was the 39 percent collapse in its mobile phone business. Mobile device revenues in the quarter dropped $2.1 billion compared to last year.
Coincidentally enough, that is almost exactly how much Apple made last quarter over the past three quarters on iPhone sales. That figure comes to $2.3 billion (including lumped-in sales of Apple TVs, which likely made up a very small portion of that total). During yesterday’s earnings call, Apple CFO Peter Oppenheimer spelled this out:
We sold 1.7 million iPhones during the March quarter . . .. Total revenue recognized during the quarter from sales of iPhone, iPhone accessories, and payments from carriers was $378 million. Total deferred revenue from iPhone and Apple TV was $1.93 billion at the end of the March quarter.
Add those together and you get $2.3 billion. That deferred revenue he is talking about is what Apple collects from its share of monthly subscription fees from AT&T and other carriers partners—an arrangement that Motorola has never been able to negotiate for its phones. So not only has the iPhone replaced Motorola-class phones as the mobile device of choice among consumers, but Apple is also replacing Motorola’s business model by tapping into that rich vein of monthly subscription fees: An arrangement, by the way, that has been as good for AT&T as it has been for Apple. [Clarification: The deferred revenue is a cumulative figure since Apple started selling iPhones in mid-2007. Last quarter, Apple added about $500 million to that cookie jar).
Here is the segment revenue line for Motorola’s mobile business:
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Motorola May Spin Off Mobile Devices Unit: iPhone’s First Casualty?
Motorola is exploring spinning off its mobile devices unit “to recapture global market leadership and to enhance shareholder value.”
The move comes in an ever increasingly tight market which has seen Apple capture 19.5% of the smartphone market in its first twelve months, a new iPhone style device announced by GPS provider Garmin, and a slew of Android powered phones coming later this year, including at least one mobile phone from computer maker Dell.
Motorola’s mobile phone market share has continued to slide in the face of existing competition with the handset unit recording a $1.2 billion loss in the 4th quarter of 2007.
Although mobile phones are still perhaps the public face of Motorola, the company is also an enterprise provider of communications tools to business, Government and the military.
We’re placing Motorola’s handset unit on Deadpool watch. Motorola has had a mixed track record of spinning off companies, having success with Freescale Semiconductor, however Iridium saw what was once the worlds leading commercial satellite network file for bankruptcy in 1999. A new company based around a business unit with a $1.2 billion loss is going to take some serious work in turning around under normal circumstances, but in a market that will see a slew of new competitors and where a new comer such as Apple can take such a big slice of the market in such a short time, it will be harder again, if not near on impossible.
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Motorola Acquires Online Music Store Soundbuzz
Motorola has acquired Singapore based music downloads site Soundbuzz.
Soundbuzz offers online music purchases throughout the South East Asia and Oceania region and currently has partnerships with Hutchison 3, Motorola, Airtel, SingTel, M1, Optus Zoo, Telstra/ BigPond Music, Microsoft (Windows Media Player 10), Creative Technology and Sony BMG. Downloads from the Soundbuzz retail store sell in Australia for $1.69 AUD ($1.47) per single.
Motorola said it would use Soundbuzz to expland its MOTOMUSIC service into India, Southeast Asia, Australia and New Zealand.
The terms of the acquisition were not disclosed.
One word of warning though, if you do wish to check out Soundbuzz, don’t try it with anything other than Internet Explorer.
(via Fox Business)
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Motorola to Announce iPhone Competitor
Motorola CEO Ed Zander has given notice that Motorola is set to announce a direct competitor to Apple’s iPhone.
Speaking at the Software 2007 conference, Zander gave the audience a brief overview of the phone. Due to be formally announced next Tuesday, he described it as a “media monster”.
The new phone will support 30 frames-a-second, full-motion video and will incorporate incorporate support for SD cards.
“We are working with another company to deliver movies on SD cards. You can start watching unbelievable quality movies,” Zander reportedly said.
Unlike the iPhone, the new Motorola device will initially be targeted at the European market: the phone will work on the 3G platform that despite having a broad global presence, still lacks coverage in the United States.
He was surprisingly upbeat though on Apples iPhone, saying that the iPhone will stimulate the overall market for feature-rich mobile devices, including Motorola’s. “I think it’s [the iPohne is] going to, in some cases, reinforce what we have been trying to do and are doing with the mobile internet. Applications such as multimedia and video and photos and music are going to be done on these devices”.
Previous TechCrunch coverage of Apple’s iPhone here.
in part via smh.com.au Coverage at CrunchGear here.
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45% of Europeans watch TV online
A new study from Motorola has found that an amazing 45% of European broadband users now watch at least some television online.
The survey covering the United Kingdom, France, Germany, Italy and Spain found that the French lead Europe in terms of online television consumption with 59% of people choosing to watch previews and episodes of their favorite shows via the web with the Germans trailing at 33%.
The survey did not ask where the respondents obtained the content, ignoring the reality that many were possibly downloading television shows from BitTorrent or similar services.
The results further strengthen the business models of startups such as Joost, that seek to target a massive potential audience through the use of streamed content over a P2P network, but with the safeguards of DRM and imposed advertising delivery built in.
The survey also found that 45% of Europeans expect to be making video calls via their home TV’s by 2012.
“Viewers across Europe are no longer satisfied with fitting into schedules dictated by broadcasters and are turning to the choice and flexibility offered by TV over the internet,” Motorola’s Karl Elliott told the BBC.
“We are witnessing a nation of citizen schedulers who are in control of their entertainment, allowing them to watch what they want, how and when they want it.”
The convergance of Television and the Internet, despite recent false starts with products such as Microsoft’s Windows Media Center, looks set to continue.
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