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How the industry shift from miniaturization to display quality blindsided Motorola

March 8th, 2013 at 1:01 PM
Motorola History Analysis

Now that another major lay-off wave is about to hit Motorola, it’s perhaps time to contemplate how the dominant company in a major industry sometimes misreads the most important consumer trends. This typically happens when a long and well-established trend suddenly reverses. People inside companies like Motorola build their entire careers around one decade-long design goal — and when the wind shifts, the company culture is often impossible to change. The handset industry spent the years 1992-2002 in a race to cut the weight of mobile phones from about 500 grams to 80 grams. After that trend crested and reversed in 2002, miniaturization leaders like Motorola were simply never able to fully adjust. The power inside the company belonged to people who specialized in shaving off another millimeter from the phone thickness.

At the end of 2001, shock waves ran through mobile phone industry. The first color-display phone with high-resolution display was launching in Europe. Japanese vendors had already been selling these sci-fi gizmos for a while, but Sony Ericsson T68 was the first true color display phone for European and U.S. markets. The phone packed 256 colors in its display — and featured a futuristic pixel count of 101 x 80. This triggered fairly ecstatic reviews among phone enthusiasts who had grown bored with 10 years of GSM phones with monochrome screens. The color display opened the door for camera phones and rapid camera quality improvements.

What is interesting about the T68 is that it pretty much represented the height of the phone miniaturization. It weighed only 84 grams. Soon after the T68 debut, the camera quality race kicked off and phone weights started ballooning as camera performance leaped from 0.3 megapixels to 1.3 megapixels and onwards. The display size and pixel count arms race began almost immediately. New challengers like Samsung (005930) and LG (066570) latched onto the quick cycle of spec improvements. The old guard, including Motorola and Nokia (NOK), started having trouble keeping up.

Motorola managed one last triumph of miniaturization with its RAZR series in 2004 and 2005. But consumer interest in RAZR devices collapsed suddenly just before a major disruption arrived in June 2007 when the iPhone finally showed how to harness a large display to radically boost the functionality of the mobile phone. What people were really interested in was a phone that was a computer. Shaving off another 3 millimeters or 5 grams from the device wasn’t a sane goal. It was a dead end.

The spectacular success of RAZR in 2005 was a cruel red herring. It convinced Motorola that focusing on making slimmer phones instead of improving display technology and user interface software was the way forward. The RAZR models featured a 30% thinner chassis than rival phones — and a nightmarishly messy, menu-based software system. The demand spike for RAZR models was the indian summer of the miniaturization obsession that dominated the phone industry in 1992-2002. It misled many leading phone vendors to ignore their profound software user experience problems just before Apple entered the phone market and devastated the old guard.

What next? Are we now edging close to the end of the display size and quality arms race, which now has defined the industry between 2002 and 2012? What is the emerging trend that the companies focusing on boosting the display size from 5 inches to 5.8 inches are ignoring?

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