Motorola Targets RIM's Territory with Droid Pro

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Motorola ( MOT ), which competes with Research in Motion ( RIMM ), Apple ( AAPL ) and Nokia ( NOK ) in the smartphone market, recently introduced seven new Android-based smartphones named Droid Pro, Bravo, Citrus, Defy, Flipout, Flipside and Spice.

Out of these smartphones, only the Droid Pro is based on the Android 2.2 version, while the rest are based on the 2.1 version. The Android 2.2 has some new features related to enterprise security and hence we believe the Droid Pro could snatch some market share from RIM's BlackBerry in the enterprise market.

Motorola continues to bring new smartphones

Mobile phones continue to be the most valuable business for Motorola and constitute around 27% of the $8.39 Trefis price estimate for Motorola's stock . The firm is continuing the trend of introducing smartphones in bulk after it launched its first smartphone Droid in November 2009. Although we estimate that Motorola's market share has continued to decline over the past year, the introduction of new smartphones has pushed up pricing and profitability for Motorola. We believe that Motorola's gross margins will continue to grow from about 18% in 2009 to around 34% by the end of the Trefis forecast period.

However, if Motorola is able to sell large volumes of Droid Pro, it could certainly push up margins at an even faster rate. There could be an upside of 2% to the $8.39 Trefis price estimate for Motorola's stock if its mobile phones gross margins were to increase to 36% by 2016, instead of the 34% that we forecast.

Droid Pro has some features for enterprise customers

RIM is the market leader in the enterprise mobile phone market with a share of around 66% as of August 2010 . However, the Droid Pro has some features which are required by enterprises. These include the ability to read and edit Microsoft Office documents, and the administrative ability to remotely wipe data from both the phone and the removable MicroSD card in the phone. Moreover, it is based on the Android 2.2 operating system, which is gaining traction in enterprises at the expense of the RIM BlackBerry OS. In another article , we discussed how RIM has started to lose market share to Android in the enterprise smartphone market.

You can see the complete $8.39 Trefis Price estimate for Motorola's stock here.

You can see the complete $72 Trefis Price estimate for RIM's stock here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: AAPL , MOT , NOK , RIMM

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