Motorola Xoom sales tepid; Production cuts next?

Motorola Xoom sales tepid; Production cuts next?

Summary: With Apple launching the iPad 2 Friday, Motorola Mobility may be forced to scramble to bolster sales of the Xoom tablet. Worries are mounting.

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With Apple launching the iPad 2 Friday, Motorola Mobility may be forced to scramble to bolster sales of the Xoom tablet.

Jefferies analyst Peter Misek on Friday argued that earnings estimates for Motorola Mobility are too high for the second quarter and 2011 because sales of the Xoom and Atrix haven't lived up to expectations.

Misek said:

Xoom sales have been underwhelming. While marketing has just started we believe MMI will likely have to cut production if it already has not done so. We believe the device has been a bit buggy and did not meet the magic price point of $500. We believe management knows this and is hurrying development and production of lower cost tablets. Importantly we believe management will likely have to make the painful decision to accept little to no margin initially in order to match iPad 2’s wholesale pricing.

On the Atrix front Misek noted that the BlackBerry Torch is outselling the Atrix at AT&T.

We'll focus on the Xoom for the moment. Misek's take on tepid Xoom sales backs up what we've been hearing anecdotally. We've heard of a handful of folks that have returned the Xoom. The frequent complaint is that the Android 3.0 Honeycomb software is buggy and prone to crashes. Expectations are simply higher given the Xoom's price.

Trip Chowdhry, an analyst at Global Equities Research, also indicated that Google's perpetual beta approach doesn't fly for electronics. Google's approach works for free services, but expectations are different for a tablet that can run you $800. "The consumer is unforgiving," said Chowdhry in a research note.

Reviews of the Xoom have also been tepid. The good news is that Xoom prices will come down because Motorola Mobility is going to have to move inventory.

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Topics: Mobility, Enterprise Software, Hardware, Laptops, Tablets, Wi-Fi

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  • RE: Motorola Xoom sales tepid; Production cuts next?

    Motorola Xoom is DOOMED.
    Brick Tamland
    • RE: Motorola Xoom sales tepid; Production cuts next?

      @Brick Tamland : you mean Xoomed.

      Reality-wise, Motorola created too much expectation and forgot Honeycomb was a point release.

      What amazes me the most is how ZDNET uses different approaches depending on OS.

      If it's Microsoft and Windows Phone 7, then sales are "just starting to pick up" as consumers "have been quite interested on the platform".

      But if it's Apple and iPad2. "Don't expect the massive success of the iPad with the iPad2". "This is only an incremental update". "No mayor value is seen by the customer by the update".

      It appears the doom falls on manufacturers and OEMs when they dare not to choose the Microsoft way. But if they do, and see no results, it's because the thing needs time.
      cosuna
      • Yeah, they just released it too early

        @cosuna The honeycomb previews looked great, but all the pieces just arent there yet to make for a solid competitor to iFad.

        Lack of flash, having to send the unit back for 4G upgrade, too pricey, Honeycomb bugs, its just too early to release this.

        Im holding out, or perhaps I'll pickup a used iFad 1.
        otaddy
      • RE: Motorola Xoom sales tepid; Production cuts next?

        @otaddy

        I agree with your other points, but I am not so sure about the lack of Flash being a problem. Lack of Flash has certainly not hampered sales of iPads.
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      • RE: Motorola Xoom sales tepid; Production cuts next?

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    • No Flash

      @ptorning Yes you are right, the iPad does not have Flash. For some of us, that means we won't buy it.

      I want a tablet, but I want it to run as many videos as it can. So I want flash, and I'm waiting for the Xoom to be able to run it.

      But, I'm also waiting for the Wi-Fi only version. I don't want a contract, and I can run it from my phone's hotspot.

      So...... i'm waiting.
      Hameiri
      • RE: Motorola Xoom sales tepid; Production cuts next?

        @Hameiri Apple's iPad 2 Wi-Fi only model just costs $499, while for a contract free Motorola Xoom, the price is $800. The iPad 2 doesn't have Flash, but you should enter the Adobe website, they even don't use Flash on their newest technology based on Javascript and HTML5.
        http://www.adobe.com/special/futureofdigital/ I like Flash, but it's something I've used for more than 12 years, it's time to open web standards and give people better web experiences based on W3C recommendations. iPad 2 web browser experience is better than if you had Flash on new websites.
        Gabriel Hernandez
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    • RE: Motorola Xoom sales tepid; Production cuts next?

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    • RE: Motorola Xoom sales tepid; Production cuts next?

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  • RE: Motorola Xoom sales tepid; Production cuts next?

    Software updates are starting now and likely we will see the wifi only version within a few weeks so it will improve I am sure. Also, I had to go to 3 stores to find one so they can't be that bad. <br><br>Oh and on ebay there were several going for the high $700's range so maybe we should wait until Motorola actually tells us rather than speculate.
    slickjim
    • RE: Motorola Xoom sales tepid; Production cuts next?

      @Peter Perry

      Motorola's not going to say anything until its earnings report. This is not going well.
      will.todd@...
      • RE: Motorola Xoom sales tepid; Production cuts next?

        @will.todd@... prove it.
        slickjim
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