Moto rolls on

Despite being criticised in the past for its commitment to the region, US mobile industry giant Motorola has identified the Middle East as a key market in its strategy to challenge Nokia for dominance of the global handset marketplace.

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By  Aaron Greenwood Published  May 9, 2006

|~|Tavakoli,-Hassan-Alex200.gif|~|Hassan Tavakoli, VP of Motorola Middle East & Africa|~|Tired of playing second fiddle to the unwavering dominance of Nokia in the mobile handset market, Motorola plans to take the challenge to the Finnish giant in key emerging markets worldwide, with the Middle East and Africa top of the agenda. The company is enjoying unprecedented commercial growth in both territories after a sluggish period earlier this decade when its priorities were focused on chasing lucrative business in the then-booming North American and European markets. With both markets stagnating, Motorola, like so many of its competitors, has turned its attention to the emerging markets to fuel future commercial growth. A combination of savvy marketing, innovative handset designs and a comprehensive product portfolio has helped the company achieve 50% annual year-on-year growth since 2003. While Nokia still maintains a considerable lead in terms of handset sales in the region, Hassan Alex Tavakoli, vice president of Motorola Middle East & Africa, says the company is well placed to snare increased market share from its arch rival. “Consumers in this part of the world are very interested in handsets that are aesthetically appealing in their design,” he says. “We are focusing heavily on providing iconic designs and ensuring every handset we market is fashionable. “The emerging markets are hugely important to the growth of our business and the Middle East and Africa are two of world’s biggest examples from this perspective. This region really represents the ‘sweet spot’ for our handset business worldwide Our long-term strategy for the Middle East and Africa will ultimately influence our overall sales results globally. “Our growth is huge. We are not talking about the typical growth figures that other companies talk about. We are talking triple-digit numbers. If our growth over the next 12 months does not exceed 50% we will be very disappointed.” Mohamed Badran, Motorola marketing director MENAT, Mobile Devices, claims Motorola is perceived by the region’s mostly youthful consumers as a “funky and sexy” forward-looking brand. He agrees with Tavakoli that the commercial potential of the region makes it vital to Motorola’s long-term business strategy. “Given the high percentage of young people that make up the regional consumer demographic, we really believe that the Middle East could potentially become one of, and if not the largest, growth markets for Motorola worldwide,” he says. “We are aiming for huge and sustainable annual double-digit growth across the Middle East and Africa in the long-term. “Our regional strategy in terms of mobile devices is based on providing customers with seamless mobility. This may sound like a fancy marketing term, but it actually refers to providing consumers with the ability to access required information at any time using a mobile handset . "We take a four-pronged strategic approach to the business in this region. We are heavily promoting our handsets’ 3G capabilities in the GCC to match the emerging demand for services. We are also promoting their inherent mp3 capabilities. We believe that from a design perspective, Motorola’s phones are iconic, particularly those in the mould of the V3. We have a host of new mobile handsets scheduled for release that are aesthetically appealing and reflect this ethos. In addition, we are heavily promoting our bluetooth innovations in the accessories market, in an effort to become a leader in the sector in this region.” ||**||Channel growth|~|Bedran,-Mohamed-----MOTOROL.gif|~|Mohamed Badran, marketing director, Motorola Mobile Devices|~|With its regional headquarters in Dubai, Badran says Motorola is looking to expand its distribution channel in key markets across the region including Turkey, Morocco, Saudi Arabia and Egypt. He says the company’s commercial growth strategy hinges on securing deals with key distributors in each market. “We work very hard with our channel partners to ensure that our products are displayed appropriately and that our corporate ethos is communicated correctly in the marketplace,” he says. “We look to nurture our channel relationships with long-term goals in mind, rather than aiming for short-term gains by providing short-term incentives. “We also provide sales training to retail staff in an effort to ensure they are not only more proficient in their jobs generally, but also sell more of our products.” Badran says the company’s biggest markets in terms of sales volumes at present are Turkey and South Africa. “Saudi Arabia is just shadowed in this respect, but it still offers huge growth potential, as does Pakistan, Egypt and Algeria,” he says. “We are working very hard to expand our distribution base in Saudi Arabia. We are recruiting new sales staff and new distributors in an effort to capitalise on the growing demand for our products in that country. We currently have three offices in Saudi Arabia and are looking to increase staffing at present. “Smaller markets showing positive signs of growth for our business include Jordan, the UAE and Kuwait.” Badran says Motorola has also built a successful re-export business in Dubai predominantly catering to the boom African markets. He says the company is mindful of the negative connotations associated with using the re-export channel as a “dumping ground” for superseded or cheap handsets and accessories. “You have to join the game in most cases when it comes to pricing because otherwise you fall into the trap of being unsettled by lateral imports coming in from Asia,” Badran explains. “Our pricing strategy is flexible, as it is with our competitors. We are always looking to ensure we have the right pricing strategy without disturbing our mainstream business in the region, because we don’t treat Dubai as a dumping ground for re-exporting products. We approach markets across the region individually and stock them in terms of demand.” Tavakoli confers, claiming that consumers living in the developed markets of the GCC are “some of the most sophisticated worldwide in terms of their purchasing decisions”. “If a handset vendor wants to be successful in this market, they will fail terribly if their strategy is based on dumping product here that cannot be sold elsewhere,” he says. “Having said that, Dubai offers a tremendous reseller market for the region that happily coexists with domestic market supply in the Gulf. “In the past, we have catered directly to demand from the GCC countries from our base in Dubai. However, as our re-export business has grown, we have taken advantage of the situation and used Dubai as a re-export hub for other markets in the region including North Africa. But this business demands a very different strategy to that involved in our domestic supply model. “There are distributors and dealers from all over Africa that have established distribution centres in Dubai. We support their business across the region.” ||**||Iran: untapped potential|~|v8_SLVR_Arabic-keypad.gif|~|Motorola plans to further customise its technology for the Middle East market|~|A sticking point to Motorola’s regional expansion plans is Iran, which the company is restricted from trading with due to the US Government’s long-standing economic embargo of the country. Tavakoli concedes Iran represents an untapped commercial opportunity, despite remaining respectful of the American embargo. “Small quantities of our product can land anywhere in the world, but we enforce plenty of conditions on our distributors that are designed to ensure they do not service the Iranian market,” he says. “The potential penalties [associated with operating in Iran] are severe for our business, and could ultimately hamper our ability to export to other markets worldwide. More than 50% of our sales are derived from export markets, so it’s simply not worth taking the risk [of trading with Iran]. “We work harder to sell more products in other markets. We ensure that other markets such as Turkey, Egypt and Saudi Arabia make up the shortfall.”||**||New technology|~|A1200.gif|~|Motorola's A1200 is scheduled for release next month|~|Badran and Tavakoli agree that Motorola’s reputation as a technological innovator has been key to its revived fortunes in the Middle East and African handset markets. “We have always led from the technology side,” says Badran. “We were the first to market with tri-band, clam shell and 3G handsets. Networtk operators are looking to expand their revenue base with key handset vendors that are keen to develop new applications, which provides us with many opportunities. For example, Mobile TV holds major potential in terms of shaping the future of handset development.” “There is an opportunity there in terms of operators providing new applications, which provides us with a major commercial opportunity – it drives our business,” adds Tavakoli. “However, it’s really the market that defines and drives the introduction of new technologies. We don’t try to influence consumers to choose one technology over another. Our goal is to provide a diverse product portfolio that capitalises on shifts in market trends.” While Motorola is arguably best known for its premium PEBL and RAZR handset ranges, Tavakoli says it is the company’s entry level models that still generate the highest sales for the company in emerging markets such as those in Africa. He explains that Motorola has secured two tenders in recent years from the GSM Association for developing low-cost, entry-level handsets for low-income earners in emerging markets. Furthermore, Tavakoli claims that these handsets, such as the C118, still boast many features that are available on the company’s high-end handsets. “In fact in terms of handset sales, our entry level C11x range is our biggest seller in the Middle East, while the V3 is also popular,” he says. Badran says Motorola is planning a number of significant product releases and updates to existing handsets over the next six to 12 months, and cites the forthcoming A1200, which has been variously described as the “first offspring of a PEBL and RAZR on steroids”, as being of major strategic value to the company’s efforts to chip away at Nokia’s market share in the region. “We will also expand our V3 and PEBL ranges and plan to introduce the next-generation ROKR handset with increased storage capacity,” he says. “We are also readying a lower-priced clamshell that resembles the V3 for release. “Our growth strategy is largely tied to expanding our product range. It is no secret that our product portfolio in the Middle East has been very slim for the past two years. But as we expand our distribution network in the region, it is enabling us to get more handsets into the various consumer price categories which is in turn driving our sales turnover.” Badran adds that Motorola plans to allocate additional resources to customising handsets and accessories specifically for local markets. “This represents an ongoing challenge,” he says. “Our entire handset range is now Arabic language capable, which was not the case just a few years ago. “This is an indication of how hard we have worked to meet the needs of local consumers. We are also developing Islamic software applications for certain markets.”||**||The Nokia challenge|~||~||~|Tavakoli explains that the goal of overtaking Nokia as the number one vendor in the handset market globally is now formally entrenched in Motorola’s corporate ethos. “We do have a stated goal to be the number one vendor in the industry within a 1000 day period,” he says. “We have a trajectory of growth, and we are well above that trajectory at the moment. The plans internally are very aggressive, and we are taking serious steps in an effort to grab the number one spot in the marketplace. We are just past the halfway mark in this process, and we have met each of the milestones set so far. “In terms of regional progress, it’s an exciting time to be in the mobile business in the Middle East and Africa.” ||**||

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