Motorola’s Comeback Kid Strategy

The road to third place

Phonemaker Motorola is mounting a comeback and is betting big on outsourcing.

The Lenovo-owned mobile phone company has been outsourcing 90% of its design to third-party providers. The firm is very confident in this business model, so much so that Lenovo executive vice president Matthew Zielinski said earlier this year, “I would bet a paycheck that in three years we will be number three around the world.”

Gunning for third is a very feasible goal for Motorola. The race for supremacy in the smartphone industry remains close. Counterpoint Research ranks Samsung first with a 19% global market share. Apple comes in second with 16%, followed by Xiaomi with 15% and OPPO and Vivo with 9%. 

Motorola’s reentry into the competitive phone-making segment came from rebooting its seminal Razr line into a foldable phone. To continue its momentum, the electronics manufacturer is leveraging outsourcing to create brand-new and affordable phones.

A familiar route

Motorola is not a newbie to the outsourcing world. In the early 2000s, it signed several billion-dollar deals with third-party manufacturers. The initiative enabled the company to leverage materials such as key components and wring out manufacturing costs.

It outsourced supply-chain services, including design, new product introduction, printed circuit board assembly, test and systems build, and aftersales support, which allowed for rapid and cost-effective production of its mobile phones. By 2006, Motorola was the second-largest phone maker in the world after Finnish company Nokia. 

Motorola still leverages a similar tactic today. It heavily relies on Dixon Technologies, a major Indian original design manufacturer (ODM), to produce its devices. In the smartphone industry, an ODM handles everything from initial design concepts to final assembly, which allows brands to reduce costs and speed up time-to-market. This differs from traditional contract manufacturing, where brands provide their designs for production.

Lessons from the past

The launch of the influential iPhone in 2007 was a landmark event that taught critical lessons to all mobile phone makers. It prompted other firms to prioritize innovation and investment in cutting-edge technology. 

It also reiterated outsourcing’s pivotal role in manufacturing since Apple partners with companies worldwide to produce its chips, supply other electronic components, and assemble its devices.

While the smartphone industry’s volatility has intimidated some, others see it as a major opportunity. A single product can propel a phone maker to unprecedented heights and also alter the industry’s landscape.

With new and old players entering and reentering the market, firms must diligently hunt for the competitive edge that would set them apart. A grand plan is nothing but a futile idea if it remains stuck in the blueprint. Outsourcing is a fundamental tool that will make these great ideas come alive.

The question for your business

Have you started on your outsourcing journey?

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