Motorola Seeks New Users for Simple Motofone

Motorola launched an entry-level cell phone on Tuesday, hoping to make up ground on rival Nokia by selling a large number of the simple handsets instead of relying on high-priced smart phones.

Motorola launched the Motofone F3 in India, planning to roll it out soon to worldwide markets. The company will focus its sales efforts on developing countries in an effort to enlist the world’s next billion mobile phone users, said Ron Garriques, president of Motorola’s mobile devices division.

The value-priced handset is designed to attract first-time users by substituting graphical icons and voice commands for the standard text-based interface. The phone saves weight and cost by using a plastic screen instead of glass, and extends battery life by using a monochrome "electronic ink" display.

Motorola launched a Global System for Mobile Communications version called the Motofone F3 Tuesday, and said it would launch a code division multiple access version called Motofone F3c by the end of 2006. The company predicted the phone will cost less than US$50, although specific prices are set by carriers.

Motorola plans to use the product to win business in a different market segment than its high-end Q smart phone and ultra-slim Razr and Krzr cell phones.

Sales of those phones pushed Motorola to sell 53.7 million handsets in the third quarter of 2006, an increase of 39 percent over that period last year and a larger gain than the market average. As a whole, worldwide mobile phone sales grew 21.5 percent in the third quarter, to 251 million units, according to market research firm Gartner.

Despite its strong performance, Motorola was not able to catch up to Nokia, which retained its position as the world’s largest mobile phone vendor with 35.1 percent of the market. Motorola trailed with 20.6 percent market share, ahead of Samsung with 12.2 percent, Gartner said.

Still, by launching its Motofone before the end of 2006, Motorola surprised some analysts who had predicted a seasonal slump for the company. "The Krzr is struggling to enjoy the same reception that greeted the Razr, and the Motofone might not be available until 2007. Christmas might not be so jolly for Motorola in some markets," Gartner said in its report.

By targeting developing markets, Motorola has made a smart move to fight that challenge, said the report by Carolina Milanesi, Gartner’s principal analyst for mobile terminals research. "Although sales of replacement handsets during the third quarter in more mature markets were not as buoyant as we have been accustomed to, they were offset by continuing momentum in sales to first-time buyers in emerging markets."

With Motofone, Motorola has made a strong bet that she is right. The company relied heavily on its mobile devices division for $7.03 billion of its total $10.6 billion revenue for the third quarter.

-Ben Ames, IDG News Service (Boston Bureau)

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