Last week, Motorola reported its fourth quarter earnings, posting a solid but less-than-expected $5.7 billion in revenue and tepidly marking its turnaround in the mobile space after years of lackluster sales following the unexpected runaway popularity of the Razr flip phone.
But it's not the $1.8 billion in revenue from Droid, Cliq and its other phones that will save the company. Looking to the future, Motorola is making a big wager on a software services suite called Motoblur.
WHAT IT IS
Motoblur is an applications and services suite that is developed by Motorola in-house. Notably absent on the popular Droid smartphone, Motoblur comes pre-loaded on the Cliq, Backflip and several other coming smartphones.
Though it initially appears as such, Motoblur isn't just a skin to the existing Google Android platform -- it's a separate service that requires you to sign up for an account with a unique username and password.
In its current incarnation, Motoblur enhances social networking by pushing content in real time to the user -- such as through Facebook, Twitter or RSS feeds -- and aggregating it in card-like windows, without the need for opening a separate application.
Moreover, Motoblur backs up your data to a Motorola-hosted cloud, allows you to track a lost phone using GPS and even allows you to remotely wipe the device.
That open door for data exchange is why Motorola is betting so big on Motoblur.
Smartphones are perhaps the most intimate of electronic devices and a boon to marketers everywhere. They record our conversations, trace our movement, mimic our reading habits, discern our music tastes and monitor our usage habits throughout the day. They know what things we like to read, who we like to talk to, what we like to listen to, what games we like to play and where we spend our waking hours.
Such data harvesting has never been possible up until just a few years ago, and the expansion of social media means people are increasingly open to offering such information without thinking twice about it.
While the current Motoblur is social networking-focused, don't let that fool you. While you're aggregating data from elsewhere, Motorola is aggregating data from you. In effect, Motoblur is the key to Motorola's customers, and serves as the platform through which the company can tailor its offerings.
The Motoblur services suite transforms Motorola from a purely hardware player to a double threat. By implementing it, Motorola is tapping into the habits of its massive user base to learn from them and adapt to meet user needs.
In one way, Motoblur is a social networking facilitator. In another, it's a cloud-based security blanket.
But Motorola has said that Motoblur will evolve over time, and is not necessarily just social networking. Perhaps that's why the company had such immense difficulty explaining exactly what Motoblur was to members of the press and customers -- so much, in fact, that Co-CEO Sanjay Jha had to clarify what it was in the wake of the announcement of Android 2.0. (And, to be frank, most folks still don't get it.)
But that's because Motoblur is an empty shell for Motorola to fill with services. It's not just social networking or security because it can do more than that, if the company wills it to. And it will.
Here's Jha on the earnings call:
First of all, we have certain experiences. There is the social networking experience. There is the multimedia experience. There is the enterprise experience. We have certain experiences. And then we have certain requirements for exclusivity, and there are certain form factors which some segments of the market prefer.
So if you take our experiences, exclusivities for carriers and the form factors which address certain segments of the marketplace, I think that these three factors drive the portfolio. And if you look at the countries US, China, and obviously some in Europe and some in Latin America, I think that really accounts for the number of smartphones we launched this year.
Regardless of the details, Motorola already claims hundreds of thousands of Motoblur activations already. That's important because it demonstrates that Motoblur is, at scale, sending billions of bytes worth of data feedback straight to the company.
To be sure, Motoblur allows Motorola to visually and experientially differentiate itself from other Android competitors such as HTC and Samsung.
But it also allows Motorola to gain valuable insight that could help it keep those consumers hooked.
But the challenge facing the company is to ensure that the Motoblur branch doesn't veer too far from the tree -- that is, the main trunk of Google Android development.
While Motoblur serves as a tool that allows Motorola to better adapt to its users, it also serves as a hindrance when its users are suddenly left behind the rest of the Android ecosystem.
Like rival HTC with its Sense UI, Motorola's Motoblur depends on in-house software development on top of existing Google Android development. Last year was indicative of the troubles this could potentially cause: in exactly one year's time, Google Android catapulted through several versions from version 1.0 to 2.1.
While plain Google Android installations on the T-Mobile (HTC) G1 and T-Mobile myTouch 3G allowed those handsets to upgrade as soon as Google released the new version of its operating system, handsets like the Cliq (1.5) and HTC's Hero (1.5) were left behind, missing new must-have features until Motorola developers processed the new release.
Motorola has said that Motoblur will evolve, and the next evolution comes with business users in mind.
From its initial launch on the Cliq, Motorola has hinted that it would address business users. That phone, marketed as the ultimate social media handset with a slide-out QWERTY keyboard, also curiously came preloaded with Quickoffice with document viewing, an application that is usually sold separately and used by business folks who need to view Word, Excel or PowerPoint files on the go.
In its earnings call last week, Motorola reaffirmed that it would add "enhancements" to address the "prosumer" market segment that blends personal and work lives. Those enhancements include more attention to such IT-critical features as security and device-management functionality.
In other words: hello, business.
Motorola also said it was planning a more "broad" set of Motoblur features to share music, photos and other content "interactively and dynamically."
In other words: hello consumers, too.
Motorola also said it would optimize the suite for device performance and power management -- a nod to early complaints that Motoblur's push notifications was the fast-track to a dead battery. (If you've doubted the viability of this demanding platform on existing hardware, bear in mind that the most recent Android phones have processors with double the muscle of the Cliq.)
This is all a roundabout way of saying that Motorola wants Motoblur to be everything to everyone -- the portal through which the company can tailor the smartphone experience in terms of interface, software and services.
Business users? Check. Consumer adults? Check. Consumer kids? Check.
Somewhere in between? Check.
That vision is backed by the reality that mobile consumers are slowly transitioning away from multimedia feature phones to true smartphones that pack data-serving power.
Here's Jha on the earnings call:
I think in smartphone, we have greater confidence. In the feature phone, though, we have seen softness that I outlined because of some uncertainty in our prepaid market, and I think that we have a better understanding of that. And we, on the other hand, in smartphones, see very good traction with carriers both in the United States, as well as outside of the United States. So, those are the two offsetting factors that have evolved in the last three months.
The deterioration in the feature phone is very localized depending on the circumstances of particular carriers. And in terms of smartphone, I think that we have greater confidence today. We have much greater visibility. And as I said, in fourth quarter, we have greater confidence today than I articulated to you before about our ability to be profitable.
Motorola's plan is to deploy "at least 20 devices" in the coming year, including one "direct-to-consumer device with Google" -- a potential "Nexus Two" that will likely be Motoblur-free. (After all, Motorola may like Motoblur, but Google need not care for an additional layer of software cluttering up the Android experience.)
In fact, Motorola said outright that it expects its legacy portfolio to "meaningfully decline throughout year" as consumers migrate to smartphones, pricey data plans be damned.
Is software and services the answer to Motorola's success? It's truly hard to tell. But if Apple's success in this area is any indication, it's worth exploring.
There's one thing I can guarantee, however: you'll be seeing a lot of Motoblur this year.