By Ronan Shields
Despite slipping to third position in terms of handset sales in the Middle East and Africa in the third quarter of 2006, Motorola enjoyed a strong overall performance in the 12 months to December, according to Harout Bedrossian, area sales manager for Motorola Middle East, North Africa and Turkey.
|~|Bedrossian.200.jpg|~|Harout Bedrossian, area sales manager for Motorola Middle East, North Africa and Turkey.|~|Electronic Channel News: What level of growth did Motorola achieve over the past 12 months?
Harout Bedrossian: The last 12 months was a record-breaking period for Motorola, particularly in the Middle East, as the company experienced 300% growth in terms of margins, overall sales and unit shipments. As an organisation, we appreciate that there will be many difficulties in maintaining the momentum of this unprecedented level of growth but we hope to replicate this success in the coming year.
The growth was spread across most product segments with entry-level handset sales proving a highlight, having already enjoyed double-digit growth from 2004 to 2005.
Our mid-range product portfolio also enjoyed strong consumer demand after we adjusted our pricing strategy for this category.
ECN: What factors do you attribute to this growth?
HB: I would say the main reason for our success has been the commitment we have shown to expanding our product portfolio. We introduced new products targeting each sector of the market which proved very popular. We have also worked hard to revitalise our channel distribution strategy in the region. We realised that it was not enough to simply judge the performance of our channel partners in terms of the number of units they sold.
This change in strategy resulted in us dissolving a number of partnerships in countries across the region including Saudi Arabia. We have established partnerships with a number of new distributors and retail partners – such as Axiom Telecom and i2 in KSA – who are committed to growing our business.
We are taking a ‘brand-building’ approach to our channel relationships and are offering greater support in terms of after-sales service. This has been to the benefit of all parties involved.
ECN: What are Motorola’s plans for the entry-level mobile phone market and how important is it to the company’s long-term strategy?
HB: Our entry-level mobile handset portfolio has been our top performer in terms of growth over the past 12 months. We expect to see our market share in this segment grow further in 2007 with the introduction of the Motofone series of handsets.
We are committed to expanding our presence in the entry-level handset market but are also acutely aware of the greater profit margins and kudos associated with success in the premium handset market. We are looking to this sector to underpin our commercial ambitions in 2007.
ECN: What is Motorola’s strategy for gaining ascendancy over its rivals in the handset market?
HB: We are adopting a three-tier approach to achieving our aim of becoming the biggest handset vendor in the Middle East, North Africa and Turkey.
Key to this strategy is ensuring we market a range of handsets that cater to customer demands across every sector of the market.
Secondly, we are working to increase our brand recognition among consumers and enhance the levels of support we offer our channel partners. The final part of this strategy is to market our products using a country-specific approach.
We are investing heavily in the region in terms of manpower and infrastructure to facilitate this expansion strategy.
We are also committed to establishing sales offices in key countries across the region, in a bid to engage local consumers. These country-based sales teams will have the autonomy to work in a way that will produce the best possible results for our business in each market.
ECN: How important is the Middle East and Africa to Motorola’s global strategy?
HB: Vitally important. The Middle East and Africa are two of Motorola’s fastest growing territories in terms of sales worldwide.
I am unable to provide exact figures – in terms of turnover or profit – but our levels of investment are indicative of the regard we have for this region and its greater commercial potential.
In 2004, our management team consisted of three people overseeing the company’s entire MEA operation, based in Dubai. We currently employ more than 50 staff working in offices scattered across the region.
ECN: What are Motorola’s core growth markets in the Middle East and Africa?
HB: Our core markets in the region are Saudi Arabia, UAE, Pakistan, Algeria, Morocco and Egypt.
Apart from the UAE, all of these countries have mobile phone penetration rates of less than 25%, which is paltry compared with Western markets. The huge population base of these markets is another important consideration.
The UAE is an important market strategically for our business. It is the hub of the handset market in the region with huge levels of tourists flocking to the country specifically to purchase electronic goods including mobile phones.
ECN: What are the key challenges facing your business in the Middle East?
HB: We face a number of logistical challenges in countries that are sparsely populated.
For example, Yemen has a population of more than 22 million with 40% of the population living in the country’s six main cities.
The other 60% live in remote regions of the country. It’s also important to consider that Yemen encompasses almost half of the Arabian Peninsula.
As a result, the main challenge we face is trying to get product to consumers in these remote regions of the country.
Another challenge relates to the nature of the retail sector in the region. Emerging markets such as Morocco and Pakistan lack the advanced retail sectors that are commonplace in the West and countries such as the UAE and Saudi Arabia.
Many retailers in these countries also lack the financial resources to source Motorola’s products. This has led us to establish credit facilities so these traders can at least gain access to our products.
ECN: How does Motorola balance style, features and functionality when designing its handsets?
HB: There are four factors we consider when designing our products: style, feature sets, overall performance and retail price. Getting that balance right is ultimately what decides if a mobile phone vendor is going to perform well in any market.
The Motorola Razr V3, which proved one of our most successful handsets of all-time, ticked all the boxes in this respect.
Rival handsets may have had longer battery life or higher megapixel cameras, but none offered such a complete package as the V3.
We are now hoping to duplicate this success with the Krzr, which extends our focus on aesthetics by featuring a magnesium casing with a glossy finish as well as a hardened glass display.
ECN: What new handsets are in the pipeline?
HB: We plan to launch seven new handsets in the Middle East over the next 12 months.
We will introduce three entry-level handsets in the Motofone range, which is the first ultra-low cost handset portfolio to feature a colour display and camera
as standard. This product range will he headed by the Motofone F3, which has received a lot of press internationally. We will also release two handsets in the mid-market segment as updates to the MOTO Slvr L6 and L7.
We will also introduce three premium handsets to complement the Krzr.
These new models comprise the Rizr – which is a sliding variant of the Krzr – and the V3X and V6.
ECN: What is the ‘next big thing’ in terms of mobile handset technology?
HB: That’s the million-dollar question that every vendor wishes they had the answer to!
It’s a good question and to be honest it’s just too difficult to say. A couple of years ago everybody was saying that GPRS would revolutionise the industry and it turned out to be a major disappointment.
The same was said of 3G technology. It’s currently available in various countries across the Middle East but has failed to set the world on fire.
Now industry speculation has turned to fourth generation (4G) technology, WiFi and Wi-Max. But will it be these technologies or updated content from 3G networks that captivates consumers? It’s anyone’s guess.
Others believe that the new mobile television technology standard developed by the DVB Project will prove a major turning point. Personally, I agree with this assessment.
As an organisation, we are hedging our bets by including both 3G and Wi-Max compatibility in our next-generation range of handsets. But ultimately, it all depends on the market dynamics, how each technology develops and most importantly, consumer interest.