Motorola Unveils New Smartphones - Analyst Blog

Yesterday, Motorola Inc. (MOT) introduced 7 new smartphones based on Google Inc.’s (GOOG) Android operating system, namely, Bravo, Citrus, Defy, Droid Pro, Flipout, Flipside and Spice. All the devices are targeted toward cost conscious customers, with Droid Pro being the most prominent.

Droid Pro will compete with Research In Motion Ltd.’s (RIMM) Blackberry, as it is targeted for corporate clients. It features a large screen with a high end camera and supports Android 2.2 operating system. It also supports Adobe Systems Inc.’s (ADBE) Flash software and has Wi-Fi short-range wireless connections that can be used even in weak cellular network coverage areas. Droid Pro will be exclusively available at Verizon Wireless outlets in early November. Verizon wireless is a venture of Verizon Communications Inc. (VZ) and Vodafone Group plc (VOD).

Motorola also unveiled three new Bluetooth accessories called the Motorola Command One, Motorola Finiti and Motorola Roadster. These three devices are geared at loud area use, all-around use and in-vehicle use, respectively. AT&T Inc. (T), the second-largest U.S. wireless operator, will sell three of Motorola’s smartphones, the Bravo, Flipout and Flipside.

In the past, Motorola made phones based on Microsoft Corp.’s (MSFT) Windows operating system, but then it switched to Google’s Android operating system. Recently, Microsoft filed a patent-infringement lawsuit against Motorola, alleging that Motorola’s Android-based phones violate nine Microsoft patents covering the synchronization of email, calendars and contacts, scheduling of meetings, and notifying applications of changes in signal strength and battery power. Despite this, Motorola announced that it is open to use Windows 7 software in future.

Motorola is rebuilding its handset business around Android, a free software that is also used by HTC Corp. and Samsung Electronics Co. Motorola aims to return its mobile-phone operations to profitability in the fourth quarter of 2010 and then spin them off along with a division making television set-top boxes early in the first quarter of 2011.

Motorola is benefiting from the significant market acceptance of Andriod as the next-generation 3G smartphone operating system. Motorola handsets feature an intuitive user interface and an efficient combination of Internet access, messaging and multi-media applications based on the Android ecosystem. The major new innovation is the customized software interface called “MOTOBLUR”. This is a social-networking interface through which Motorola is trying to differentiate its products from other smartphones. Currently, more than 6,000 multimedia and social networking applications are available on the Android ecosystem. Motorola is trying hard to expand this platform using its proprietary MOTODEV program.

We maintain our long-term Neutral recommendation on Motorola. It is currently a short-term Zacks #3 Rank (Hold) stock.