Motorola 2009 Annual Report Download - page 10

2
Our Industry
In 2009, total industry shipments of wireless handsets decreased approximately 6% compared to 2008,
primarily as a result of the global economic downturn. This was the first annual decline in handset industry unit
shipments since 2001. The economic downturn resulted in slower growth in the emerging markets and lower
replacement sales in highly-penetrated markets, primarily in the U.S. and Western Europe. By the fourth quarter
of 2009, the industry began showing signs of recovery with positive quarterly year-over-year growth.
With many customers maintaining tight inventory management during 2009, a strengthening global economy
and improving consumer demand, the recent handset market recovery is expected to continue through 2010.
Analysts are predicting total industry handset shipments to increase approximately 9% (on average) for the
full-year 2010 compared to 2009. Growth is expected to be driven from new subscribers in emerging markets and
increasing demand for smartphones.
Smartphones are expected to be the fastest growing and the most profitable segment of the mobile handset
industry over the next several years. Key drivers of this growth include: (i) consumer desires for feature-rich
devices that provide access to mobile Internet, media, social networking, navigation and messaging at anytime
and anyplace, (ii) operators drive to increase data ARPU (average revenue per user) to offset declining voice
ARPU, (iii) the trend toward open operating systems that provide computer-like functionality to handsets, and
(iv) the evolution of networks to support high-speed Internet access (3G and 4G).
Our Strategy
The Mobile Devices segment is focused on delivering compelling, mobile experiences to consumers while
becoming the hub of people’s lives and the gateway to the mobile Internet. With the Android operating platform
and our MOTOBLURTM software solution and MotoDEV application development program, we intend to
provide applications and services to support end-to-end, customizable solutions desired by consumers.
As the market evolves to reflect the emergence of converged wireless devices, mobile Internet, media/video,
social networking, navigation and messaging, the shift from voice-centric devices to data-centric devices continues
to accelerate. These devices, which include smartphones developed on open platforms, deliver unique consumer
experiences and require complete end-to-end solutions that incorporate various applications and services. By
utilizing the smartphone, we are able to deliver computer-like functionality, such as web browsing and email,
across our portfolio. We believe that open platforms foster innovation and encourage the development of
applications suited to consumers, wherever they are located.
Our primary smartphone development is based on the Android operating system (a Google-developed,
royalty-free open platform). The Android platform is a modular operating system which enables multiple
simultaneous operations. It provides a well-developed ecosystem that continues to grow with a broad range of
applications.
We are differentiating our Android smartphone experience through our unique MOTOBLUR software
solution. MOTOBLUR utilizes cloud-based services to help ensure that our users digital lives can be accessed
from anywhere. It combines content-forward, deeply integrated software applications and a unique interface with
a server-based back-end solution that gathers, organizes and delivers fresh content and data automatically. In
addition to MOTOBLUR, we are enabling third-party solutions through our MotoDEV application development
programs. MotoDEV leverages partner ecosystems to deliver customizable content to consumers. This content can
be pre-loaded, embedded or downloaded on Android-powered devices. In some markets, as in China, we offer
our SHOP4APPS application store to provide consumers additional applications and service choices.
As the segment creates stronger software solutions and capabilities, we continue to invest in next-generation
technologies for wireless devices based on High-Speed Downlink Packet Access (HSDPA) and Long-Term
Evolution (LTE). These investments provide opportunities to differentiate our products as we develop
smartphones that support the migration toward higher network bandwidth.
In addition to our smartphone portfolio and focus on delivering key experiences, we are also (i) maintaining
our technological leadership in our proprietary iDEN technology, (ii) focusing on priority markets, (iii) selectively
offering voice-centric devices through third-party original design manufacturer (‘‘ODM’’) development, and
(iv) leveraging companion products to deliver complete mobile experiences.