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Motorola KRZR K1m Ships Across All CDMA Carriers| October 5, 2006 | Mobile Devices | Competitive Intelligence Report | Client Access | Analyst: Avi Greengart
On October 3rd Verizon Wireless, Alltel, and Sprint all announced that they will offer Motorola’s MOTOKRZR K1m. The KRZR is a super-slim clamshell megapixel cameraphone with EV-DO modem, microSD slot, MP3 playback, and touch sensitive buttons. Verizon Wireless is offering the KRZR immediately online for $199 after rebates. Alltel is offering the KRZR on October 5 for $249, and Sprint has announced availability in early November but no pricing. • Current Perspective: Very positive on the KRZR arriving at multiple carriers at premium – but attainable – pricing. Obviously, the more shelf space the KRZR gets at multiple carriers, the better its chances of success. Verizon Wireless is pricing the KRZR at $199 after rebate, and Alltel has the handset for $50 more. Sprint has not announced pricing, and is just pre-announcing the KRZR so as not to lose sales to rivals. However, anything under $300 would be a good starting point for the fashion-oriented phone (pricing will have to drop down to RAZR levels over time to sustain sales). • Vendor Importance: Very high to Motorola because it is demonstrating tremendous strength with the KRZR, which was not limited by carrier exclusivity and, remarkably, does not bear any carrier branding on the case. Sprint’s slowdown in subscriber growth has been attributed, in part, to the lack of a RAZR at the carrier, which explains why Sprint would pre-announce handsets not due until November. Verizon Wireless once had the dowdiest handset lineup and relied solely on its network to draw subscribers, but now places a much higher value on having hot handsets, and appears to have dramatically sped up its network qualification process to help. With a much smaller subscriber footprint than its national rivals, Alltel has always placed a premium on being quick to market with new handsets (it was the first to sell the CDMA RAZR). • Market Impact: Very high on the consumer handset market because the RAZR is the best selling phone in the world, and the design has lost its wow factor through ubiquity. Meanwhile, entirely new design motifs like the rounded, organic PEBL have not shared the RAZR’s level of success. Therefore, the KRZR is Motorola’s compromise: a new handset, but an extension of the RAZR line. Recommended Competitor Actions • Cingular and T-Mobile should clear up the confusion about and pre-announce their holiday 2006 lineup. • Samsung must shake things up in its industrial design group to retake the momentum Motorola has stolen. It needs original designs; it cannot simply copy others. • LG’s Chocolate successfully brings an attractive, uniquely LG design to the market. However, it needs to be offered at more carriers and at lower price points in order to compete against Motorola’s KRZR. • Nokia must use its design and CMF (Colors, Materials, and Finishes) expertise to create affordable alternatives to the RAZR and KRZR, bring the 8800 series down in price at least enough to compete with the KRZR, and bring these products to CDMA. • Kyocera, a CDMA-only manufacturer, has done a nice job cultivating MVNOs with high quality, low cost entry level phones and the occasional unique product (the QWERTY Switch_back is a hit at Virgin Mobile). However, Kyocera has nothing remotely competitive with Samsung and LG’s mid-tier phones, never mind the KRZR. • Sanyo is essentially Sprint’s house brand, and it is about to get a lot more competition. The company has stylish models in Japan, but, with the exception of the Katana (a RAZR clone), Sanyo’s U.S. products are all bubble-shaped clamshells.
Recommended End User / Customer Actions • Consumers looking for “the next RAZR” can find it at Verizon Wireless, Sprint, or Alltel. Cingular or T-Mobile will likely have a GSM version shortly as well. • Sprint should push Motorola to provide more attractive phones for its Nextel unit, which is seeing much higher churn than in the past. While some Nextel users prefer bulky, indestructible phones, there is a market for more stylish iDEN (and iDEN/CDMA hybrid) handsets. • Consumers coming off a long term contract will discover that the RAZR that was $200+ the last time they bought a phone is now under $100 at nearly every carrier in the U.S. and will likely start heading down to $50 this holiday season or immediately afterwards. Fifty million fans can’t be wrong: while no longer a fresh design, the original RAZR is an icon. • End users looking for advanced imaging capabilities should look to better alternatives from Sony-Ericsson, Nokia, and Samsung. Nokia offers Symbian smartphones with Carl Zeiss optics, Sony Ericsson offers compelling megapixel feature phones that look like digital cameras, and Samsung offers 3 MP cameraphones subsidized by Verizon Wireless.
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