Motorola’s pricing strategy

February 8, 2011 § 1 Comment

A few weeks ago, Motorola had on its hands, two certifiably hyped up and much wanted devices- the Atrix 4G superphone launching on AT&T and the Xoom tablet launching on Verizon. What was known was that the devices had some of the best technical specs in their respective fledgling categories and also boasted the Motorola stamp of quality- one that has good street cred with the success of the Droid platform. Also in tow was their excellent experience in crafting cool Android products. In all, a win-win. Coinciding with the split of the company and the launch of Motorola Mobility (NASDAQ: MMI), this was to be a rebirth of the iconic Motorola brand with a new identity.

What has followed is a very puzzling pricing strategy that threatens to kill all the buzz surrounding these products (if the Internet forums are to be believed). The Atrix was supposed to be ATT and Motorola’s champion against iPhone on Verizon. And from a product stand point, it still is. But from a cost standpoint, it has the possibility of falling short of its lofty goals. The phone has been priced at $199 on a 2 year contract but the Atrix accessories which include a cool laptop dock and an entertainment dock have both been priced significantly out of a normal person’s reach.  The dock costs $300 when bought along with the phone (total $500) and $500 if bought separately. To note, a brand new iPad costs $500 in comparison. The entertainment dock comes with a wireless keyboard and a mouse for $200. Full pricing details are available here. To me, it seems like the pricing does not reflect that of its competition and does not capitalize on the uniqueness of its accessories. If there is a hidden secret sauce here, I am missing it. The Atrix looks like one of the coolest devices to be launched this year, one I was seriously considering upgrading to. At this price point, I am not sure if I can afford it.

The Xoom tablet was officially launched to the American public with a Superbowl ad that reminded us of the iconic Apple 1984 ad, just that Apple was “The Man” this time around. Earlier in the month, Google and Motorola had previewed the tablet and the new Android Honeycomb OS that will power it. People (and yours truly) were really excited for the tablet. It looked and played cool. And then came the hammer that the Xoom would cost $800. Yep, the first genuine iPad competitor (ignoring the Samsung Galaxy tab which was running an Android version designed for smartphones)  will cost almost twice as much. Yes, I agree that the $800 Xoom has inbuilt 3G which the $499 iPad does not. But people tend to compare apples to oranges all the time. And the barrier of entry is much higher for the Xoom than the iPad. In addition, the VZ data plans for tablets are pretty expensive (not that any tablet 3G plan is cheap). All in all, the Xoom is going to have a tough time matching the iPad sales numbers which is a pity considering that it looks and feels like a fantastic product- comparable if not better than the iPad.

I am no business executive or finance maven but in my humble opinion, Motorola should have launched a WiFi only SKU comparable in price to the iPad. The WAN version should have been priced closer to the iPad 3G price ($630) although Apple has immense pricing flexibility due to their purchase volumes ( I should someday write a post on Apple’s excellent supply chain management). The Atrix accessories should have been much cheaper. If you think the laptop dock to be really a screen with a connector and 15 inch LCD screens costing less than $80 in the market (cheaper with more volume) pricing it at $300 or worse still $500 puts it out of the reach of very many people. Until this changes, Motorola has lost a surefire customer in me for the Atrix and a possible customer for the Xoom.

I didn’t think there would be a day where the “premium” Apple products are also the most affordable ones in their segment. To be clear, I am not blaming Motorola for all this. It is probably a mixture of costs, strategy and also carrier constraints which are driving the pricing but it is something that is worth a revisit. For my sake if not anyone else 😦

Update: To validate the barrier for entry point, HP/Palm just announced the TouchPad tablet with webOS and the first model to ship will be Wi-Fi only. Well played HP/Palm. Very smart business move. More on the TouchPad here and here. I will write a separate blog post on this topic soon.


Design Thinking and Apple

June 16, 2010 § Leave a comment

I will start this post with a disclaimer that I have limited experience on this topic. It is an area I have been fascinated by, and have been reading up all the material I can find on it. I am just putting my collection of thoughts on the matter here. I expect this post to serve mostly as a springboard to exploring the topic in further detail.

My inspiration for this post is an excellent book  I just finished reading titled The Design of Business: Why Design Thinking is the Next Competitive Advantage by Roger L.Martin. More on the author here. The author argues that the future great companies will be pioneered by a new way of business thinking he terms as Design Thinking. This is not to be confused with marketing and branding. As FastCompany describes it,”it is a proven and repeatable problem-solving protocol, that any business or profession can employ to achieve extraordinary results”. Such a method is a carefully chosen amalgam of innovative thinking and an analytics based approach to doing business. With this introduction, I can delve into the reason why there is an Apple on the blog post title, which is why most of you are here. If you want to skip the rest of the post in favor of learning more about design thinking, I would recommend that you start at the footsteps of the famed thinkers of IDEO. The HBR article by Tim Brown of IDEO is also a good starting point. Oh by the way, IDEO and Apple have a shared past that reflects why they are, who they are. More on that relationship and the growth of IDEO is captured in an excellent book by Tom Kelley, The Art of Innovation: Lessons in Creativity from IDEO, America’s Leading Design Firm.

If you view how products are rolled out by Apple under the design microscope provided ably by the aforementioned pillars, there is a lot of fascinating stuff to see and learn. At Apple, there is a sense of design thinking in much of what they show and sell to the world. There is a tremendous amount of onus on the human centric approach to designing their products. The iPod was not the most innovative product in the market. Nor was the iPhone. They are instead a very user friendly solution to a known problem. They represent a vision of wanting to change how the mobile device is perceived and used, but not so far as to alienate the audience. For much of that they have Jon to thank. But they also have Steve to thank for his unerring sense of audience perception and customer requirement. He is willing to go where the customer wants to but doesn’t know to.

There is occasionally a resistance at Apple to take user feedback into evolving the device or creating one to reach everyone (Eg: lack of 3G in the first generation iPhone, lack of camera in iPod Touch, lack of camera in first generation iPad and so on). Some are business considerations while others just don’t make any sense. But these are minor quibbles while looking at the big picture of how Apple has revolutionized design and how we perceive it. Admittedly, Apple is at an odd but very successful crossroads between technology and liberal arts.

It could also be argued that Apple has had its share of failures in what it thought was a great idea at the time (Ex: Apple TV, iPod Shuffle in some versions). What cannot be denied is that the design powerhouse shows us a way to think and execute on good ideas and make them great products. For Apple, it is not just the technology. It is so much more.

If you are really interested in learning more about this particular topic of how design thinking and Apple’s innovation go hand in hand, there is a paid HBR article here.

Google’s Redesign

May 6, 2010 § Leave a comment

As many of you would have noticed by now, Google had a significant makeover yesterday. From trivial elements like removing shadowing effects on the logo to larger changes like a left frame in the search results page, there are a quite a few differences of note. As someone interested in design paradigms for business, I was definitely curious to know the real reasons behind these changes.

The official list of changes and rationale is provided by Marissa Mayer, VP at Google for Search and User Experience here.

BusinessWeek has a brief video interview of a bunch of people who were involved in the design process here. In this interview, one of the Google UI Designers claims that this change is a platform for future features which is a very interesting.

There is also some internet chatter about how Bing could have influenced the left frame creation in the search results. I am not sure how true this is but is definitely worth reading the arguments  here and here. If it were to be true, no harm done as the key to innovative and good products is competition. If Bing could have inspired a Google search result design change, that is great for the use.

Here is a non-Google view of why this redesign happened.

Finally, if you are really interested in design paradigms for a search interface, here is a wonderful article from a blog I have come to admire very much. It is a lengthy read but very cool.

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