SINGAPORE (Reuters) - The runaway success of its ultra-slim Razr cellphone has given Motorola Inc. an edge over key rivals Nokia and Samsung Electronics, but the gap could narrow in 2006 as Samsung unveils a slew of copycat thin designs.
Motorola''s (NYSE:MOT - news) titanium silver Razr, measuring just 13.9mm thick and weighing a mere 95 grams, became a status symbol and design icon when it was introduced at the end of last year.
Sales of the high-end Razr and its successors have boosted Motorola''s market share and profit in the July-September quarter. Now, in a fierce battle to claw back market share, arch-rival Samsung Electronics Co. Ltd. (005930.KS) has unveiled five copycat ultra-thin models to be launched in Europe by year-end.
"The Razr is a killer phone, among the world leaders in volume terms, as it is differentiated heavily from the competition by its ultra-thin form factor -- it has a visual ''wow'' factor that few devices have at this time," said Neil Mawston, analyst at research firm Strategy Analytics.
"But Motorola today is experiencing a Golden Age that will be difficult, if not impossible, to sustain in the next 2 to 3 years, as copycat ultra-slim designs will reduce the uniqueness of the Razr through 2007 -- the gap between Motorola and the rest will close in 2006 or 2007," Mawston added.
Samsung launched its first Razr lookalike -- the clamshell V740 -- in May and its successor, the V8400 slider phone, in October. But analysts said the V740 fell short of the Razr''s more elegant and streamlined design.
According to South Korean media reports, the Razr outsold the V740 by 120,000 units to 90,000 units on Samsung''s home turf after the two phones were released almost simultaneously in June.
Ovum research estimates that 500,000 Razr units were sold in
South Korea in the two months of July and August, while telecoms industry data show it was the country''s top-seller in September.
But Samsung is not sitting still.
"For the past few years, we have dedicated research and development resources to slim phones. Slim products are one of our main focuses next year," a company spokesman told Reuters.
Samsung''s year-end European line-up comprises two 3G phones -- the Z510 and the Z540 -- that are 14.9mm thick, two slider phones D800 and D820, and the P3000 -- a credit card-sized camera phone that measures a sleek 8.9mm.
Analysts said while the Razr had succeeded in widening the gap between Motorola and Samsung, the latter''s new portfolio of ultra-thin phones could halt Motorola''s runaway growth next year.
"We think Samsung has a clear case of Razr-envy," said Ovum research analyst Nathan Burley.
"It has led in technologies like imaging, though its designs may have lagged. But it is doing lots to improve its designs and can hold its own. I wouldn''t write them off just yet," he added.
HIGH-MARGIN STAKES
What is at stake for handset makers is the higher margin, and more lucrative, slice of the cellphone market.
Motorola, the world''s second-largest handset maker, made the biggest jump in its market share to 18.7 percent in the third quarter from 13.5 percent a year ago, due in part to the Razr, Gartner data showed.
In contrast, third-ranked Samsung of South Korea saw its share slide to 12.5 percent from 13.7 percent a year earlier, when it held the number two spot briefly for one quarter. Industry leader, Finland''s Nokia (NOK1V.HE), increased its share in the third quarter by 1.6 percentage points to 32.6 percent.
Motorola said last month that its third-quarter profit more than tripled to US$1.75 billion, or 69 cents a share, buoyed largely by Razr sales, which exceeded 6.5 million in the quarter.
Motorola unveiled a black Razr -- the Blzr -- in April, while the Slvr, a candy bar-shaped version of the Razr, will be on retail shelves next month. Blue and pink-colored versions of the Razr will also be available early next year.
Meanwhile, demand for the Razr has not slowed, and Motorola has a few more surprises up its sleeve over the next few years, its Corporate Vice President Michael Tatelman told Reuters.
"We have some really new ideas coming, as material science, manufacturing capabilities, our designers and engineers continue to push the envelope," he added.
DARK HORSE
While Samsung and Motorola wrestle in the ultra-slim market, Nokia remains a dark horse.
"Nokia to-date has not been clear in outlining its ultra-thin handset strategy. We expect an ultra-thin GSM phone from Nokia in 2006, simply because it needs one fast, to blunt the existing competitive edge of Motorola," said Strategy Analytics'' Mawston.
Instead, Nokia seems to have resisted the ultra-thin concept with its relatively chunkier N71 and N92 multimedia phones, said Gartner analyst Nick Ingelbrecht.
The clamshell N71, measuring 25.8 mm thick, offers a music player, a 2-megapixel camera and video capabilities, while the twist-and-fold N92 model is a third-generation mobile TV phone. Both will be available in early to middle of next year.
"Nokia''s made no effort to compete in the thin phones segment, instead they''ve gone for fat phones. The thinking seems to be they do not want to be in the ''Me Too'' category," he added.
Nokia considers ultra-thin designs an important feature for its users, spokesman Kari Tuutti told Reuters.
"Thinness of the phone is one factor among others when we plan the design, certainly we are also looking at this. We aim to cover all categories where there is wide demand from consumers."
