Motorola Music Phone Sales Fall Short of Expectations

By Mike Hughlett, Chicago Tribune

Oct. 5–Motorola’s much-ballyhooed Rokr music phone — a joint venture with Apple Computer — has posted disappointing sales since hitting store shelves almost a month ago, says a report issued Tuesday by a stock brokerage.

A Tribune spot check Monday of five Chicago area mobile phone retailers found that Rokr sales were short of expectations at those locations, and well below sales of Motorola’s hot-selling and fashionable Razr phone.

The Rokr, some industry analysts say, just doesn’t seem to possess the “cool” cachet of the ultra-thin Razr, which has helped burnish Motorola’s brand since its debut last year.

“The primary selling point is “the look” and the Razr has the look,” said Larry Sweis, owner of ABC Wireless in Lakeview. The Rokr doesn’t, he said, noting he he’s sold only one of them, while he’s sold at least 25 Razrs during the past four weeks.

The Rokr is the first of a line of Motorola phones that allow users to download music from Apple’s popular iTunes website, where songs cost 99 cents. The phone is the first iTunes-compatible portable music player, aside from Apple’s mega-selling iPod.

Motorola and Apple announced the phone in July 2004, and after months of delays, it was finally launched Sept. 8. It costs $250 along with a two-year service plan from Cingular Wireless. Without the plan, the suggested retail price is $399.

Stock analyst Mike Walkley at Minneapolis-based Piper Jaffray & Co. found “mixed to negative reviews of the much anticipated Rokr phone” in his monthly survey of phone retailers, which was released Tuesday.

Some stores noted strong early sales of the Rokr, but more stores were “indicating disappointment in the product,” Walkley wrote in a research note. He surveys over 100 stores in major U.S. cities.

Walkley said weak Rokr sales in the near term shouldn’t hurt Motorola’s earnings. He and other analysts see music phones as a long-term opportunity, and they expect many different models from Schaumburg-based Motorola.

Motorola declined to release sales data on the inaugural iTunes phone, saying the company is in a “quite period” prior to releasing its third quarter earnings. However, Motorola spokeswoman Monica Rohleder said Tuesday, “We are very excited about the product.”

Atlanta-based Cingular also declined to divulge sales figures. But Jennifer Bowcock, a Cingular spokeswoman, said the company was “pleased” with the Rokr’s launch and that nationally, sales were meeting expectations.

At four Chicago-area Cingular stores, though, that wasn’t the case this week. Sales people at all four said that in their experience, sales have been below expectations.

“It’s not really meeting my personal expectations,” said a manager at one north side Chicago Cingular store. He said he’s sold six Rokrs. Still, he said the phone has helped drive business to the store. “It’s created excitement,” he said.

That’s essentially what Piper’s Walkley found in his survey. “They’re getting great traffic (from the Rokr). But people aren’t walking out with it.”

Retailers surveyed by Walkley cited “form factor” as one reason behind disappointing sales. That’s industry talk for a how a cell phone looks and feels.

“The first Rokr just doesn’t have that “coolness” factor,” Walkley said.

That’s been a fairly common refrain from industry observers. “It’s not as svelte or frankly as fashionable a feature phone as the Razr,” said Ross Rubin, a consumer electronics analyst with NPD Group in New York.

Some gadget reviewers have been even more blunt. A review in London’s Sunday Times called the Rokr a “donkey,” saying “This chunk of plastic tat is light years away from Motorola’s swish Razr phone.”

The Razr was launched last November at $499, a “super premium” phone. Its price was dropped to $199 in June. But even before the price cut, demand far outstripped Motorola’s expectations.

Michael Avadek, manager of a Highland Park Cingular store, said that over the past month, he’s sold up to 40 Razrs every two days. During that same time, he said he’s sold about 40 Rokrs per week. He also said initial demand for the Razr seemed stronger than that for the Rokr.

Aside from style, retailers told Walkley that the phone’s $250 price tag was a barrier to sales, as was its capacity to hold only 100 songs.

“A lot of people are into the size of the storage, and 100 songs isn’t much, said Sweis, whose ABC Wireless carries phones sold through Cingular, Verizon, Sprint and other wireless networks.

Apple’s new iPod Nano, a portable music player unveiled the same day as the Rokr, holds 500 songs and costs $199 (in its base model).

Meanwhile, Nokia recently announced a new music phone last month that will hold up to 750 songs.

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Copyright (c) 2005, Chicago Tribune

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