Motorola Smartphones In The U.S.: A Rollercoaster

Yesterday, when NPD released its latest figures for mobile phone sales in the U.S., they showed that Google’s Android saw huge growth over the last year. Yet Motorola (NYSE: MMI) — one of Android’s biggest supporters, and itself a Google (NSDQ: GOOG) acquisition target — was losing ground. That prompted us to ask NPD about how Motorola has been performing historically. It turns out that Motorola’s sales have not followed a single path.

As you can see in the table above, Motorola’s smartphone market share has been all over the map. In Q2 2007, before Android and iPhone existed, the story was all about Symbian, Microsoft (NSDQ: MSFT), RIM (NSDQ: RIMM) and proprietary operating systems. At that time, a full one-third of all smartphones sold in the U.S. were made by Motorola. By Q2 2009, that share had plummeted down to only two percent.

Ironically, Q2 2009 was actually the first time in several quarters that Motorola had shown a profit — $26 million on sales of $5.5 billion. But that had less to do with its devices business than in cost cutting. Some 7,000 jobs were cut in the quarter. In fact the handset division lost $253 million in Q2 2009.

There were promises of the company’s first Android devices on the horizon, though. These started to arrive by the end of the year, and that was what drove the company’s market share up in 2010.

But what the graphic from NPD seems to be showing is that the rising Android tide does not necessarily lift all boats. Although the company saw a big boost between 2009 and 2010, gaining 13 percent of all smartphone sales in the U.S., between 2010 and 2011 that trend appears to have reversed. Motorola then lost three percent, with the current share of smartphone sales at the 12 percent mark.

What happened? The market has seen a flood of other Android handsets competing against the Motorola devices, not just on specifications but on price. And the competitive pressure from other platforms should not be underestimated, either: when Verizon was finally able to get a CDMA version of Apple’s iPhone, it was Android sales at the carrier that suffered, and Verizon is a key channel for Motorola.

In fact, if you look at a recent table from the analyst Horace Dediu, the only major smartphone maker that has seen a rise in market share worldwide has been Apple (NSDQ: AAPL), with the others in decline as the number of competitors increase:

The bigger-picture story, of how Motorola has been faring in mobile sales overall, is not terribly encouraging. It’s been in a steady decline for the past five years — although one could argue that any portfolio with increasingly less popular feature devices might be facing a similar fate longer term.

You might well ask what it is that Google sees in Motorola (besides patents). A direct link to Google, by way of ownership, could give Motorola devices the boost it needs to gain more market share again — especially if Motorola finds itself competing against fewer Android devices because of that Google connection.

NPD thinks there could be an opportunity to make more low-cost smartphones to target prepay users, for example. However, if you believe the recent reports about Apple, that’s a market it will be soon targetting, too.