Wednesday, March 15, 2006

RAZR Phones Return to Shelves

The RED HERRING reports that Motorola’s "RAZR cell phone reappeared on some shelves Tuesday after being pulled from Cingular Wireless and T-Mobile stores last week because of a manufacturing defect."

Edward Snyder at Charter Equity Research noted that the problem was caused by "a switch that connects calls when the phone is opened fluttered on and off, causing the phone to be disconnected as if the flip phone were closed."

Handsets were pulled from stores last Friday so Cingular and T-Mobile could return the affected phones. Motorola claimed it only concerned a limited number of phones and both network operators were starting to sell the Razr again this week.

Regarding the impact on Motorola due to the glitch, Charles Golvin at Forrester Research said, "My sense was it was a minor hiccup, a little bit of a bad press day for them,. But I doubt it will have a big impact on sales. I think, for consumers, it’s lost in the fine print."

Snyder concurred, stating “Strong sales of new models and continued popularity on RAZR should yield good year over year results for the company." However, Snyder did caution saying, "We do not expect any material impact to financials, but remain concerned about supply chain management at Motorola. Last quarter’s supply chain of parts to SLVR and PEBL phones do not appear to be isolated incidences."

When it comes to smartphones, you definitely have to wonder about Motorola's supply chain and product lifecycle management capabilities. Lots of examples, such as the never launched MPx, the ill-fated MPx220 and the long-awaited Q, which was announced last summer and is still not here yet. During that interim, a number of handsets have been launched (i.e. Treo 700w, Sprint PPC-6700 (HTC Apache), T-Mobile MDA and Cingular 8125 (HTC Wizard)) that have taken away any advantage the Q potentially had if it was released on time. Oh well....