TOKYO (Reuters) - Motorola Inc. (NYSE:MOT - news), the world's second-largest mobile phone maker, could partner with a Japanese manufacturer to launch appealing phones that will help it boost its presence in Japan, its chief executive said on Thursday.
The Chicago area-based communications technology company, which doubled earnings and increased sales by 18 percent to a new record last year, is setting its sights on one of the world's most sophisticated mobile phone markets as well as other regions in Asia even as it solidifies its strength elsewhere.
"We're trying to figure out how to get into the market quicker with our brand and working potentially with someone else," said Chief Executive Ed Zander, referring to Japan, in an interview with Reuters in Tokyo.
"(We're) talking to the NECs, the Panasonics, the Sanyos, and looking at 'Is there technology collaboration to bring products to market?'... We're exploring some of those things," he said.
Japan accounts for less than 10 percent of global mobile phone demand but has been at the forefront of a global shift to high-speed mobile services since 2001, when NTT DoCoMo Inc. (9437.T) became the world's first mobile operator to launch a commercial third-generation (3G) service based on the W- CDMA standard, one of two competing 3G formats.
But global mobile phone makers have had little presence in Japan, in large part because Japanese second-generation mobile networks were based on a unique, home-grown technology.
The few foreign phones that have been introduced failed to attract Japanese users as their designs did not appeal to Japanese tastes. The models also lacked some key features such as standard technology that allows users to easily write text messages in Japanese, creating the impression that they were inferior to Japanese phones.
Japan's mobile market is dominated by domestic manufacturers, led by Sharp Corp. (6753.T), NEC Corp. (6701.T) and Matsushita Electric Industrial Co. Ltd. (6752.T) in contrast to other markets, which are dominated by Nokia (NOK1V.HE), Motorola and Samsung Electronics Co. Ltd. (005930.KS).
"We want to do more (in Japan)," Zander said. "This could be a big market for us, and we're not happy with what we've done so far in handsets."
MOVING IN RIGHT DIRECTION
The timing could be good for Motorola as Japanese mobile operators such as NTT DoCoMo have shown increasing interest in partnerships with foreign handset makers as a way to bring more competition into the market and lower procurement costs.
Motorola and DoCoMo on Wednesday announced a jointly developed prototype for a next-generation HSDPA handset, increasing the likelihood that Motorola would be included in the initial phone lineup when DoCoMo is expected to start the service this summer.
Outside of Japan, Zander said Motorola was putting effort into its business in India, where it is still a small player in a market dominated by Nokia.
"We had a pretty good Q4 and we expect this year to grow market share considerably," Zander said.
Expressing the confidence of an executive who drove Motorola from a market share of around 13 percent in 2003 before he took the helm to nearly 20 percent at the end of 2005, he added, "You can get back pretty quick to double-digit market share."
Since Zander, a former Sun Microsystems executive, took over, the company has recovered its No. 2 market share position worldwide as it leads in the North American and Latin American markets. It is also No. 2 in Europe and North Asia.
The company, which struggled to reach a double-digit operating profit margin under predecessor Chris Galvin, reported an overall profit margin of nearly 12 percent in 2005. Shares have risen more than 60 percent since he took the top job.
Motorola appears to be quickly nearing its long-term operating margin goal of 13 percent to 15 percent, but Zander declined to comment on whether the company would reach that this year.
"I'm not in it for the short term. What I have to do is build a long-term value proposition," Zander said, adding that he has to weigh the achievement of that goal against the benefits of making investments in markets and technologies at the right time.
"We are moving in the right direction," he said.
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