Motorola dials up sleeker iTunes phone to cure its Rokr blues

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Can the Razr save the iTunes phone?

The first and much-heralded iTunes Rokr phone hit something of a sour note with critics and many consumers, and certainly didn't seem to be shaping up as the holiday gift hit that Motorola might have hoped for. But none of that may matter in a few weeks' time, as the phone manufacturer is working feverishly on a new, sleeker iTunes phone to be out in time for Christmas.

Few details are available about the phone-notably whether it will simply be an updated and restyled model of the existing Rokr-but tech blogs are buzzing that the iTunes platform will be transferred to Motorola's red-hot Razr line.

Either way, partners Apple, Cingular Wireless and Motorola need to do something fast. Only two months in the market, the iTunes Rokr phone has been criticized for everything ranging from its 100-song limitation to the length of time it takes to transfer a song from the computer to the clunky, un-iPod style device.

"It jerks around, stutters and isn't smooth," said Clint Wheelok, VP-wireless research at NPD Wireless. "It's no Razr, let's face it."

In its short life span, the phone's price has plummeted from the original unsubsidized $250 to $149.99 on Cingular's Web site to as low as $49.99 at Amazon.com, each with a new two-year service contract. Cingular itself relegated the iTunes phone, which it had previously touted as its great white hope for the holidays, to the bottom half of its Web page. A Cingular spokesman, in an e-mail, said the price drop is designed to "boost consumer interest even more" for the holidays and declined to "speculate on any new products that might be in the pipeline." An Apple spokesman referred calls to Motorola. A Motorola spokeswoman said the iTunes Rokr "has done as well or better" than other new phones.

Motorola maintains the brand was always a work in progress. "It's absolutely a release 1.0," said Geoffrey Frost, chief marketing officer, in a recent interview. "Look, it's not a Razr. It's not perfect, but it's really good," he said, calling sales "strong."

Mr. Frost and Apple CEO Steve Jobs last month said the phone launched in September amid much hype and a multimillion-dollar advertising blitz that included Madonna would be replaced soon. One executive familiar with the situation said, in fact, a newer, "sleeker" version of the phone is coming, but one still limited to 100 songs.

Mr. Frost said Motorola has a long-term strategy for iTunes products, and both Motorola and Cingular Wireless, which has a three-month iTunes exclusive in the U.S., are optimistic they can be involved when Apple decides to launch a true iPod phone. "The whole intention is that is not a one-shot product," said Mr. Frost.

Chris Ambrosio, director-wireless service, Strategy Analytics, estimated the iTunes phone would sell about 250,000 units globally-and it did. Motorola CEO Ed Zander, in an Oct. 18 call with analysts, said 250,000 of the units were shipped in 30 days after launch in September. "We're pleased with the response outside the United States," he said, ticking off the attributes of a device he called a "great phone" but noting, "it's not an iPod player." Nor is it anywhere near as popular as the iconic Razr, which sold 6.5 million units in the first quarter.

Albert Lin, an analyst with American Technology Research, was cited in news reports saying that the Rokr had return rates up to six times higher than its competitors, but he did not return calls seeking comment.

No hot cakes

An informal survey of retailers by Advertising Age did not duplicate the high return rate statistic, but did find the phone, as one clerk at an independent cellphone dealer in Santa Cruz, Calif., put it, "was not going like hot cakes" while another Cingular phone, the $89.99 Nokia 6102, sold well.

A number of branding experts said that in addition to shortcomings of the product itself, the execution had a number of missteps. For one, initial buzz about the product in blogs and in the media called the device an "iPod" phone, suggesting the product would have the look and feel of the iconic music player.

"I was anticipating something with the flair and sizzle of the iPod," said Jason Cieslak, executive director-interactive media, Siegel & Gale, a strategic branding firm. Mr. Cieslak said Mr. Jobs may have gone along with the phone to "protect his flank" from other telecom manufacturers and service providers gearing up for over the air music downloads directly to the cellphone. Or, he said, it may have been a premature attempt to "learn from before making an official splash into the phone pool" with a true iPod phone.

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