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DECEMBER 5, 2005
The Leading Edge Is Razr-Thin Motorola's cool phone has Samsung and other rivals in hot pursuit Back in the fall ofs 2003, Chris Arnholt, a designer at Motorola Inc. (MOT ), pushed the company to buck a growing trend. While most phones were getting plumper to pack in cameras and stereo speakers, Arnholt and top company executives wanted to become what they called "the kings of thin." The result: the wildly popular Razr, introduced a year ago. Barely a half-inch thick, with sleek lines and a shimmering keypad, it has become the must-have phone for actress Mischa Barton, celeb Denise Richards and more than 12 million cell-phone users across the globe. "It's like driving a Mercedes vs. a regular ol' ride," said hip-hop mogul Sean "P. Diddy" Combs earlier this year. HALO EFFECT Well, it's time to check the rearview. Rivals are coming on fast with their own trim mobile phones to take on Motorola's pacesetter. Korea's Samsung Electronics looks to be the most aggressive. By the first week in December, Sprint Nextel Corp. (S ) is expected to start selling Samsung's A900, a similarly svelte clamshell phone. No mistaking Samsung's intentions: The phone was originally code-named "Blade." Meanwhile, Samsung is providing T-Mobile USA with a skinny slider phone, which has a keypad that slips down from behind the screen. And No. 1 phonemaker Nokia has introduced in the U.S. its 8801 phone, another sleek slider. The company says it has been selling briskly overseas. Yes, thin is in. And the trend will continue into next year. In the first quarter, Motorola plans to debut its Q phone, a razor-thin device designed to compete with the popular BlackBerry for the e-mail addicted. The company also has a new slender candy bar phone, dubbed the Slvr (for sliver), that should be available from carriers in the U.S. by early next year. Samsung plans a candy bar model too, just a third of an inch thick, by the end of March. "Throughout our entire line we will make products slimmer," says Peter Skarzynski, Samsung USA's senior vice-president for mobile phones. There's more at stake here than meets the eye. Cool phones create cachet for the companies that make them. Top brass throughout the industry have noticed how the Razr's sex appeal has had a halo effect at Motorola. Although the company still trails Nokia by a wide margin, Motorola is on a tear like no other player in the business, boosting its market share from 13.5%, when the Razr was introduced a year ago, to nearly 19% this year, according to researcher Gartner Inc. "It acts as a catalyst for users to become more familiar with the brand," explains Richard S. Siber, CEO of wireless advisory firm SiberConsulting. "So familiar they actually request the brand." That's one reason Samsung is striving to repeat its performance of a decade ago. After Motorola introduced the StarTac, the first pocket-size clamshell phone, Samsung followed suit by improving the design. It gave users a bigger screen by moving it from the bottom to the top of the phone and introduced color. Motorola was slow to respond, and Samsung gained swaths of market share. Now Samsung is trying to get the drop on Motorola with new features and designs, including a thin clamshell that can handle television. The Sprint phone will operate on Sprint's high-speed wireless network, allowing users to watch live TV from the NFL Network and Fox News. "The service is a key differentiator," says Jeffrey D. Hallock, vice-president of product marketing at Sprint Nextel. "It's a great alternative [to the Razr]." Meanwhile, Motorola hopes to have a similarly featured Razr on Verizon Wireless shelves before yearend. Motorola CEO Edward J. Zander makes no secret of his strategy to maintain momentum. He says the company is planning a host of variations on the original silver Razr, including reddish-pink and blue versions for the holidays. "The Razr has done more than just sell our product," he says. "It's got customers around the world looking at Motorola and saying, 'Hey, they're creative and cool and sexy again."' The thin-and-colorful approach works in some circles. Actress Richards went for hot pink.  By Roger O. Crockett Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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