Motorola: Rebirth, Nokia Watch Out

Blogger's Note: Reengineering a stodgy company like Motorola is truly amazing. The current No. 2 phone maker is gunning for Nokia's pole position with innovative and stylish products. Don't be confused when using innovative and stylish in describing Motorola. They have learned their lessons and trying to balance their engineering/technology acumen and cool designs.

Motorola embraces the ethos of cool
New focus on design wins back customers
The Associated Press, Updated: 6:33 p.m. ET April 11, 2005

Technology always trumped good looks at Motorola Inc., whose distinguished 77-year resume includes the first car radio, walkie-talkie and cell phone but not a lot of tech beauty prizes.

Geeks like Jim Wicks, working for a competitor a decade ago, were impressed with its well-engineered products but winced at their industrial look and relentlessly black and gray colors. "I thought, 'Wow great products but why are they so ugly?'" recalled Wick, now Motorola's chief phone designer.

Today, plain is out and sleek and stylish are in as a new focus on design wins back customers and market share at Motorola — a comeback from a long decline in full force after 1 1/2 years.

The symbol of the resurgence is the ultra-thin Razr, whose success helped vault the Schaumburg, Ill., company over worldwide leader Nokia Corp. as the top phone seller in North America last year and, even more noteworthy, stamped pioneer Motorola as the trendsetter again in innovative design.

The $450 Razr embodies "a departure from the stodgy, engineering-driven, Midwestern company that was Motorola," according to Yankee Group analyst John Jackson.

From stodgy to stylish
Those core values may make for a strong foundation but they don't necessarily resonate in an age where so many consumers want their choice of cell phone to define cool.

"These guys have to evolve from an engineering-focused company to a hip, slick, dynamic, rapidly moving consumer electronics company," Jackson said. "Thus far, they've been able to do that."

The device formerly known as the cell phone, as Motorola insiders refer to it, has itself been on an industrywide roll as consumers embrace its growing tools — camera, e-mail, music, speakerphone and shrinking size. The number of mobile phones sold worldwide surged 30 percent to 674 million last year en route to a projected 730 million-plus in 2005, according to the Gartner research firm.

"It's gone from a communications tool to a consumer electronics device in the last 10 years, or in some cases an object of self-expression," said Wicks.

Motorola appeared to have a head start on the development of consumer-conscious cell phones in 1996 with the pocket-sized StarTAC, a popular early clamshell or flip phone. But a series of subsequent operating and strategic flubs weakened sales, dropping it behind Nokia and threatening to tarnish its reputation for innovation.

That all began to change about four years ago with a bigger embrace of style and fashion.

Focus on the consumer
Mike Zafirovski, then chief of the cell-phone business, expanded the design team and hired wunderkind Wicks away from Sony Corp., where he'd headed the Japanese company's innovation center. Motorola poured more money into consumer research, conducting global studies and researching lifestyle trends as it began ramping up design. The number of phones it designs annually has risen by 40 percent since, to between 60 and 100.

The company subsequently opened a design center in downtown Chicago to attract young talent disinclined to work at its cell-phone headquarters in the distant suburb of Libertyville, Ill.

Today, Wicks leads a staff of over 200 design employees worldwide that reflects a mixture of right- and left-brain thinking, including sociologists, psychologists, musicologists, engineers, graphics designers and software and colors specialists.

It's all about making consumer tastes the priority instead of technology, said the 41-year-old Wicks, a rapid-fire talker wearing glasses, a pink shirt and the occasional Jim Carrey grin.

"Back then we were saying 'Here's the features and the technology,' then put a wrapper around it," he said in an interview at Motorola's office overlooking the Lake Michigan shoreline. "Now the starting point is 'What does the consumer want?' and then apply the technology to that."

The company's research, plus strong sales from the last five quarters, even confirm that old-world Motorola is scoring points with the young, edgy crowd.

"I think we're definitely getting cool," said Wicks. "We used to see research from Asia (about Motorola phones) saying things like, 'It's like some Cadillac that nobody wants.' Now we see research that it's seen as very innovative and cool."

Birth of the Razr
The company's Triplets phones delivered the first success from the new approach in the first quarter of 2004. But the release of the flashy Razr V3 sent the loudest message that Motorola was back. Shiny, angular and an implausible 1/2-inch thin, the quad-band phone packs a color camera, Bluetooth wireless technology, instant messaging and unique ring tones into a 3.3-ounce clamshell design.

Motorola started scheming on the project in July 2003 as part of the industrywide race to develop the skinniest phone possible. It had already made a phone the thickness of four credit cards, but that never made it out of the lab because the battery lasted only 20 minutes.

This time, the use of non-plastic materials and a design tweak helped produce a test model in six months with a seven-hour battery life. It was made of aircraft-grade aluminum, magnesium and a chemically hardened lens and featured an etched-metal keypad and an antenna hidden in the mouthpiece.

New CEO Ed Zander, sensing a hit product in the making, sped up development. After a round of torture tests — baking, freezing, smashing and dropping steel balls on them — the phones were declared fully functional by last June and sent to markets in the fall.

At the same time, designers were working on the next products from the Razr "family": The oval PEBL V6 or Pebble, designed to look like jewelry, and the SLVR V8 or Sliver, a non-clamshell version of the Razr. Both are due out this year, as are a pair of much-awaited phones that will enable wireless music downloads.

The company says about 1 million consumers have bought Razrs, representing just a tiny fraction of the roughly 100 million cell phones it sold in 2004.

But analysts say the model helped boost profit margins and created a buzz among consumers that helped build momentum for other products.

A 35 percent leap in sales last year pushed Motorola's share of the global cell phone market back up to 15.4 percent and enabled it to take back second place from Samsung Electronics Co., which briefly surpassed it in the third quarter, according to research firm Gartner Inc.

Recapturing the No. 1 spot is a driving goal for Motorola, which even has a secret, informal target date, according to Wicks. But Nokia itself is not a role model, he insisted, despite remaining the runaway leader with over 30 percent.

"I have no aspiration for us to be like anyone else," the design chief said. "We've got to be Motorola and we've got to win. It's a heritage, and we're reasserting it."

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. © 2005 MSNBC.com URL: http://www.msnbc.msn.com/id/7432916/