Phones ring once again

New owner Lenovo pins profit hopes on return to market it abandoned

Motorola Mobility LLP is back in China, three years after abandoning the world's largest smartphone market.

Unveiling an array of handsets, and a Lenovo Group Ltd subsidiary, Motorola said on Jan 21 that coming back to China and other emerging markets will help it become profitable.

Liu Jun, Lenovo's senior vice-president who heads the mobility unit, said it has localized a number of Motorola applications, set up for Chinese buyers. The devices will pre-install China-only navigation software, utility apps and an app store operated by Lenovo.

Liu said the devices will be initially manufactured in Tianjin municipality and in Guangdong province but there are also plans to move manufacturing to Wuhan, Central China, where Lenovo has its largest phone and tablet assembly factory.

Motorola, headquartered in Chicago, quit selling phones in China more than a year ago after it was bought by Google Inc.

But since acquiring the company from Google for $2.9 billion early last year, Lenovo officials say they had been preparing Motorola to move back into more emerging markets.

Motorola will focus on the mid- and high-end sector in China, a market Lenovo has been finding hard to penetrate.

Liu said Motorola will not compete head-to-head with Lenovo-branded phones because the latter's major target customer group remains budget phone buyers.

Before reintroducing Motorola to China, Lenovo depended heavily on contract phone sales. But big subsidy cuts from telecom operators have hurt sales.

According to research firm Analysys International, Lenovo is in an intense fight with Samsung Electronics Co Ltd and affordable phone maker Xiaomi Corp to claim the top position in China.

"We come to China as a challenger," said Rick Osterloh, Motorola's president and chief operating officer, as he pledged to offer buyers the chance to design their own gadgets.

An online customer design program named Motorola Maker allows buyers to choose both the material and color of their phone case as well as the phone's storage space available.

Wang Jingwen, a Shanghai-based analyst from Canalys China, said Lenovo also has the chance to cooperate with Google in producing Nexus products after the Motorola buyout. Google is updating the world's most popular smartphone OS Android, which is also used in Motorola and Lenovo handsets.

"More importantly, (after buying Motorola) Lenovo gains access to a large patent portfolio which will be very useful for vendor's overseas expansion," Wang said.

Motorola's new China strategy does not include its popular wearable technology, however.

The highly anticipated smart watch, the Moto360, runs on Google Inc's Google Wear operating system, is not currently available on the Chinese mainland, but Osterloh said it will be later this year.

Although the growth in smartphone sales slowed significantly last year, China remains the world's most valuable handset market.

A recent report from technology consultancy IDC said growing demand in smaller cities and increasing demand for fourth-generation telecom networks will provide new opportunities for smartphone vendors.

IDC estimates that in future more than 90 percent of the country will have 4G signal coverage.

gaoyuan@chinadaily.com.cn

(China Daily Africa Weekly 01/30/2015 page21)