So, after it was announced that Motorola Mobility was being pawned off to Lenovo for $2.9 billion, the new owner boasted that they would soon beat Apple and Samsung when it comes to smartphone sales. As usual, that quote was repeated with no reality check whatsoever.
Consider that a company will not usually sell off a division unless there’s a problem. If Motorola Mobility was doing as well as it did in the 1990s, when Motorola handsets led the world, it would still be a part of the original company. Certainly if sales had increased under Google, and losses turned to profits, do you really believe the division would be sold off at a loss? What sense would that make?
Of course, Google isn’t exactly going to admit that they made this deal with Lenovo at a fire sale price because the division was failing. A corporation’s spin machine seldom recognizes reality. Whether Apple, Amazon, Google, Samsung or anyone, bad news is tempered with an excuse.
On the other hand, if anything Apple sells produces losses, the stock price would fall far more rapidly than it has in recent days (although it’s pretty flat as of the time I am writing this column). Even good news from Apple is frequently regarded as somehow bad. So Apple sells a record number of iPhones, claiming more could be sold if the product mix was right. That means they built too many copies of the iPhone 5c, and not enough of the iPhone 5s. What this means, regardless, is that the average transaction price no doubt skewed higher. Isn’t that a good thing? After all, it means higher profits.
Except that some Wall Street analysts pulled out higher estimates — from somewhere, but not necessarily from real sources.
But let’s return to Lenovo and their brazen boast. True, Lenovo does very well in the declining PC market. True, Lenovo seems to be growing smartphone sales in Asia, but how does that translate to a magical huge jump in sales soon as the Motorola brand name is affixed to those products? Even if the poor selling Motorola handsets are replaced with newly-designed gear, will it make any difference?
Why should a potential customer suddenly believe that Motorola is a competitive product to consider after years of falling sales? Can Lenovo’s influence somehow spark a new wave of innovation that hasn’t existed in recent years? Where’s Lenovo’s reputation for true innovation in the PC market? Why should that company’s executives be taken seriously?
Of course, this is nothing new. Whenever a rival to Apple comes out with a supposedly competing product, that claims will garner headlines by some segments of the media. The press release will be heavily quoted without critical comment, but few reporters will actually do their homework and check the company’s history to see how previous product introductions have fared. The goal is to somehow get Apple involved in the story–or at least the headline — even if there is no direct involvement, and no evidence whatever that potential Apple customers will prefer the rival product — now or ever.
You see some of this at the annual Consumer Electronics Show, where loads of new tech gear, both real and potential, are on display. In recent years, some companies have announced products that seem clearly aimed at what Apple might do. So in 2010, you saw new tablets being introduced, but most of them vanished in the haze when the iPad arrived.
Lenovo famously introduced a smart TV set some time back, though it appeared to be designed strictly for the Asian market. But it also came at a time when anticipation for a new Apple TV solution had reached a fever pitch. These days that anticipation is still there, but mostly simmering in the background as Apple TV quietly offers more streaming channels; the latest is a professional wrestling channel.
This year, in addition to revised connected TV sets with Ultra HD and less 3D, there were smartwatches. Pebble, Samsung — you name it. Yet it hasn’t been demonstrated yet just how well one of these gadgets will fare as mass market gear. Selling a few hundred thousand units here and there wouldn’t likely impress Apple.
But the headlines? It’s often about introducing something to head off Apple at the pass, compete with Apple, do something to Apple, do anything to Apple. Sure, if it’s a cheap smartphone or PC, it’s quite possible that Apple will be bested in total unit sales — as Samsung has done with mobile handsets — even though the profits from most of that gear will be lacking.
Fair competition, however, means going after Apple in its own markets. That means premium smartphones, premium tablets and premium personal computers. But when a company claims it can beat the competition, that’s little more than one wrestler saying they can wallop another wrestler. You take it with the same grain of salt until they actually produce.
Far too many members of the media, however, mistake the sales pitches for news.