Motorola Sees Modest Xoom and Atrix Sales, Must Differentiate: Report

Motorola's Xoom tablet and Atrix smartphone are experiencing modest sales, according to one analyst. Differentiating in a crowded market, he advises, will be key.

The Xoom, Motorola's answer to the Apple iPad, isn't being snatched off of shelves at quite the rate expected by industry observers. Neither is the Atrix 4G, Motorola's smartphone with a complementary laptop-slash-dock that pairs the brains of the phone with a full keyboard, 11.6-inch display, touch-pad, USB ports and bigger speakers.

In an April 5 research note, Pacific Crest analyst James Faucette reported that channel checks found sales to be "disappointing," with the Atrix (priced at $200 with a two-year contract with AT&T) losing out to less expensive Android smartphones and the price-slashed iPhone 3G-now only $49 while supplies last.

According to Forbes, Faucette lowered his 2011 revenue forecast for the company from $13.7 billion to $12.2 billion, and warned that there could be further downside risk to 2011 and 2012 estimates unless Motorola can "quickly adjust and refresh its product portfolio."

The company will need to "substantially differentiate themselves from the rest of the pack" with its next set of products, Faucette added. Otherwise, "shareholders may be looking at another meaningful step down."

Smartphones and tablets indeed run in crowded packs these days-at the Consumer Electronics Show in January, nearly 100 tablets were on display-making differentiation no easy feat. (HTC is trying to make its Flyer tablet stand out by equipping it with, of all things, a stylus.)

Nonetheless, the tech world is taking note of the Xoom. Reacting to Apple's March 2 introduction of the Apple iPad 2, analyst Ken Hyers, with Technology Business Research, twice mentioned the Xoom, telling eWEEK that the iPad 2-the market leader by a long shot-failed to match the Xoom's screen resolution and cameras. And from an ecosystem perspective, he added, "For hardware developers, it's straightforward to build whatever device they want using Android. Look at the Xoom."

Again responding to the iPad 2, analyst Jack Gold, with J. Gold Associates, also pointed to the Motorola tablet. "I don't see [the iPad 2] as heads above the competition-especially the Xoom-right now," Gold wrote in a March 2 research note.

And in testing in eWEEK's Labs, the Xoom came out on top, with reviewer Clint Boulton describing himself as "smitten" after two days of testing. "As far as pure Web-surfing experiences go, the Motorola Xoom Android 3.0 'Honeycomb' tablet is an absolute joy to use," he wrote. "It satisfies a craving users have had to enjoy the power of their laptops with the portability of their smartphones."

With the Atrix, Motorola would appear to be doing the same-merging the perks of each device. Other reviews of the smartphone were enthusiastic. In The Wall Street Journal, Walter S. Mossberg called it "one of the nicest smartphones I've tested," while The New York Times' David Pogue called it a "beautiful, loaded, screamingly fast Android phone."

However, criticisms by each perhaps explain a bit of the phone's modest sales. Pogue found watching Flash video to be "jerky" on the Atrix laptop, and Mossberg complained that the applications weren't as polished or powerful as typical PC applications, and that there were clumsy aspects to using the phone clicked in to the dock. Pogue concluded that Motorola had a "really, really brilliant idea," but looked forward to its next version of the Atrix setup, which presumably would be over its present hiccups.

The culprit, however, may be AT&T's device portfolio-beefed up over recent quarters in anticipation of the carrier's loss of its exclusive rights to the Apple iPhone.

In addition to the iPhone 3GS, Faucette added in his research note, the HTC Inspire was keeping Atrix sales "well below forecast."

Motorola will announce its first-quarter results on April 28.