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Sagging Motorola pins hopes on 3G market

By Chen Xiaorong (China Daily)
Updated: 2009-01-05 08:06

US mobile phone producer Motorola, once dominant in the world cell phone market, is fighting for survival as China prepares to launch its third-generation (3G) mobile communication network.

"We're venturing a bet on the Chinese market," said Bruce Brada, senior vice-president of Motorola.

The current No 3 world mobile phone maker lost its top position to Nokia in 1998 and now only captures about 8 percent of the world cell phone market. It suffered a net loss of $397 million in the third quarter of 2008, in contrast to its net profit of $4 million as of June the same year.

Worldwide financial turmoil is hurting Motorola more than other mobile phone manufacturers, according to recruitment company Garner International.

But Motorola is clinging to existence with 15 percent of the Chinese cell phone market and 10 percent of the Chinese smart phone market, far more than it has in any other country.

"Every time Motorola encountered some kind of battle of Waterloo, it managed to avoid complete collapse by relying on its strength in the Chinese market," said He Qi, an industry observer.

Brada said China's 3G system is a huge opportunity for Motorola to reverse its fortunes.

"It's high time for the company to launch more products specifically for the Chinese market, to cater for Chinese customers' tastes and meet their demand. The growth of the Chinese market can support Motorola's efforts in other countries," he said.

CDMA and GSM standard networks are already in place but China has delayed launching its 3G services, while perfecting its homegrown standard, TD-SCDMA, which may have enormous potential in the world's largest mobile market.

"Grasping the 3G market in advance instead of struggling for the already-lost 2G or 2.5G markets makes more sense as a way for Motorola to rebuild," said an anonymous industry expert on cctime.com.

Chinese authorities will soon award 3G licenses to major telecoms carriers.

Motorola, talked with China Mobile, China's largest mobile phone network operator, in November about producing handsets compatible with TD-SCDMA.

Motorola and China Mobile signed a cooperative agreement early in 2008 to begin a 3G research project in China. The two sides will jointly study how possible services may mesh with China's future 3G networks.

Motorola outsourced 3G handset manufacturing to several Taiwan companies, such as Compal Communications Inc and Foxconn, in September. Motorola's unveiled its first dual-module TD-SCDMA handset for the Chinese market, the L800t, in June.

The L800t isn't radically different than other phones and didn't attract many Chinese customers, but its early release showed Motorola understands how much its survival hinges on getting ahead of the rest of China's mobile phone market, said industry experts.

The L800t was included in China Mobile's coming mobile terminal purchase. But Motorola rivals such as Sumsung, Nokia and LG, are quickly developing their own TD-SCDMA handsets.

"We plan to invest more in China, and to strengthen product R&D here this year," Brada said.