By Ed Oswald | Tuesday, April 5, 2011 at 7:44 pm
Motorola’s Xoom tablet doesn’t lack for hype. Actual sales, however, may be another matter. At least two analysts have come out in the past two days and cited “poor” Xoom sales in adjusting their forecasts for Motorola revenue in the current quarter.
RBC Capital Markets analyst Mark Sue was the first on Friday, and said higher competition would put a strain on the company. He cut his Xoom shipments forecast by 25% to 300,000 units in the current quarter and called sales “slow.” This was followed by Pacific Crest analyst James Faucette who called Xoom sales (and of Motorola’s Atrix 4G smartphone) “disappointing.”
What’s the issue here? I’m going to take an educated guess and say its pricing pressures. In the case of the Xoom, it is still priced well above the market-leading iPad. For such a premium, Motorola needs to prove its worth to the consumer and I don’t think it has done that.
As Faucette notes, the Atrix’s issues may actually result from other smartphones on AT&T being priced well below the device, such as the $49 iPhone 3GS. The Atrix on the other hand retails for $199.99. While it’s the same price as the iPhone 4, if people are looking for a cheaper solution on the carrier with a decent feature set, it’s certainly there.
If anything’s obvious from this, it’s that price is king. Will this lead Motorola to reconsider its strategy? I guess we’ll find out.