[These are “raw” and unedited notes.]
Sanjay presented at the DB technology conference last night, and here are our notes from the webcast:
When asked about how it’s been in the last two years, he highlighted progress and reiterated that they are confident that they can be profitable in Q4 as a standalone business.
The focus is on the change in software development and the shift to “Internet style” methods. This is a big deal. Very different model. Much more work to do there. We think that means many more acquisitions.
The key markets are US, China and Latin America. Very strong brand recognition around the world. Intent to purchase is not great. It’s moving up rapidly though. [This is a key metric.]
Notes that they will “have to spend a lot of money to build the brand” which is a bit scary.
Variable data rates will start to create a mid-market for smartphones. Today it’s still all high end. Whether you pay $99 or $199 the data plans are the same and fairly expensive.
Wants to be in Europe by 2011. May make sense to do a deal there.
Motorola is a strong brand in China. Was early and strong there from the early days. Limitations on Google there make Motorola a key Android driver in China.
Lower end markets may be very accessible for Android-based phones in the near future. Probably more of a China, Latin American, South East Asia market. But still very large.
Usage model on tablets is very different than phones. Represents an incremental market. Probably a more natural evolution for a phone company like Motorola than for a computer company. See this as a threat to a computer manufacturers.
Question is how do you address the 20% of the time when the smartphone display and keypad is not enough but you still want to be able to take it with you. [If it is going to be in your pocket it will have to be projector based I guess. You can’t put a 10-12 inch screen and a keyboard in a pocket.]
Q4 there is RIM V6, Microsoft Mobile Windows 7 with $400M in marketing behind it – what’s going to happen? Notes HTC has done well with devices.
[I’d be asking some better questions than these. What about the supply chain? MOT tends to be “sold out” at the beginning of a new cycle. Why? By the time supply catches up HTC seems to leapfrog. Doesn’t seem like real leadership.]
Single component limiting supply is camera sensor modules! Interesting. Is it OVTI? Thinks that there has been somewhat limited investment in semiconductors. We need more capacity. It’s coming in the next few quarters.
If the iPhone comes to Verizon it could be an issue for Motorola volumes and profits. Nobody knows yet but it’s an issue to be aware of.
Will only deliver Android-based tablets when the experience is compelling. The hope is that is in early 2011.
How do they keep an edge over competition? Better physical design and software and services to make a better user experience. (2M motoblur users today.) Most consumer returns are over software rather than hardware.
60% of homes are HD already. More multi-room DVR equipment is being purchased. Wants to grow more outside the US. Lower cost set-tops that are more IP based is driving margins down a bit.
Might Motorola take advantage of converged devices in the home? Security? Other uses of those big screens? More powerful set top boxes with stronger processors and additional software could change the role of the “set top box” device.
You will need multi gigahertz processors to deliver performance in 2011 with dual and quad-core phones. (!)
In terms of spin off the company will have $3B+ in cash and the flexibility to do what they need to do.
Interesting question on balancing platform advance, compatibility and being able to differentiate.
12,000+ patents at Motorola Mobility is clearly an asset. Means they will generally pay lower royalties and also gives them more freedom.
The marketplace experience has to get a lot better. Unified marketplace may be coming. There are at least a dozen pieces of low-hanging fruit there.
Wants to create a media solution around the home but not clear where they are in terms of delivering it. There could be an ecosystems around the set-top box space as there is around mobile. Interesting idea. No idea where that’s going.
[Disclosure: Motorola shares are part of the R2 model portfolio and the author also has a long position in the stock at the time of this writing.]