The smartphone ducks may be lining up nicely for Motorola's Droid X, which lands Thursday at Verizon Wireless.
In this summer of smartphone discontent---tight supplies of the HTC Evo and Incredible and antenna woes for Apple's iPhone 4---Motorola may be the biggest beneficiary. If Motorola can meet demand with its smartphones it's going to solidify its position in the Android device race.
Analysts are still wary about long-term competition for Motorola, but many agree that there's a nice window of opportunity for the company. Jefferies analyst William Choi writes in a research note:
Our checks suggest Verizon had good sell-thru of original Droid phone in Q2, helped by an aggressive buy-one-get-one-free promos. We see some upside to our Q3 smartphone ests of 3.6 million, due to continued strength at Verizon. Rival HTC failed to fully capitalize on robust demand for its Droid Incredible at Verizon due to supply constraints. Orders for Droid Incredible is backlogged at Verizon until August 5. As a result, Motorola's Droid X, which is coming out on July 15, should be a net beneficiary. In addition, we hear Droid 2 (with a keyboard) will be launched sometime in August. All of this means ship-in for Q3 should be good for Motorola.
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Other analysts agree. Barclays Capital analyst Jeff Kvaal says that Droid sales held up well and likely hit his 2.5 million target, largely due to "chronic shortages of HTC's Incredible." Indeed, HTC's supply chain woes allowed Motorola to navigate a key quarter ahead of the Droid X debut. Motorola is expected to report second quarter earnings of 7 cents a share on revenue of $5.18 billion later this month.
Meanwhile, Motorola could also get some momentum from Apple's problems with the iPhone 4. It's unclear whether Consumer Reports' testing of the iPhone hurts word of mouth for Apple's device, but the PR problems certainly won't hurt Motorola's demand picture. MKM Partners upgraded Motorola on the theory that Apple and HTC are giving the company an opening to exploit.
What's unclear is long Motorola will have this window of opportunity. Apple could placate Consumer Reports as early as Friday and customers and HTC could eventually meet demand. In addition, the iPhone may come to Verizon Wireless in the first quarter. Those moving parts indicate that Motorola doesn't have completely clear sailing. But for now times are pretty good for Motorola relative to all the worries when the company reported its first quarter results.
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