The history of Motorola’s phone business is like a roller coaster ride. After decades of developing his expertise in radio communications, Motorola engineer Martin Cooper made history in 1973 by making the first public call from a prototype cell phone. A decade later, Motorola turned that breakthrough into the DynaTAC 8000X (pictured), widely considered the first portable cell phone available to consumers. From there, the company became one of the biggest names in the mobile phone industry, releasing ever smaller and more sophisticated phones before releasing the iconic StarTAC and RAZR V3 in 1996 and 2004, respectively. But it wasn’t all easy.
In 2006, Motorola was at the height of its power, holding about 21% of the global mobile phone market, making it the world’s second-largest phone maker behind Nokia. Much of that success was due to the RAZR, which had become a huge hit since its launch in 2004. But rather than develop a new generation of phones, the company relied on the formula that had worked so well, producing variants of the RAZR like the PEBL, SLVR, and KRZR. Although sales remained fairly healthy for a while, Motorola became overly reliant on its aging product line at a time when the market was changing rapidly. Competitors were already moving forward with 3G phones and the emerging smartphone category, including BlackBerry devices, although it’s fair to say that this new type of phone was a relatively niche part of the market in the mid-2000s. Motorola, meanwhile, struggled to find a successor to the RAZR that could capture attention in the same way. And then, in 2007, came the Apple iPhone.
Motorola faces multiple challenges
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Apple didn’t invent the smartphone, but the iPhone transformed expectations of what such a device could be. Its striking design, large touchscreen, intuitive interface and ability to support a wide variety of applications made it an instant hit with consumers around the world. A year before the iPhone arrived, Motorola attempted to enter the smartphone market with the MOTO Q, a BlackBerry-like phone with a physical QWERTY keyboard, but the device struggled to make an impact. While Motorola also continued to promote the increasingly outdated RAZR and its variants, many of its competitors were quickly moving toward a new generation of sleeker smartphones.
Motorola suffered greatly from this shift, with its phone shipments and market share falling in 2007 and 2008, while its mobile business landed in the red. By 2008, the company was lagging behind Nokia and Samsung, while Apple and BlackBerry were reshaping the high end of the market. Motorola’s global share of cell phones fell from 21.1% at its peak in 2006 to just 8.7% in 2008. In 2009, it fell again, to just 4.8%. Meanwhile, Apple’s iPhone went from strength to strength, with the fourth generation arriving in 2010, while Samsung made waves with its new Android-powered Galaxy S.
By the end of the decade, Motorola’s once-dominant phone business was in decline, and the company needed a new strategy if it was to remain relevant. The ball got started with the appointment in 2008 of Sanjay Jha, who was named head of the mobile business. The veteran Qualcomm executive has set out to implement a radical change in Motorola’s direction, but it will be some time before the first signs of recovery appear.
Getting back on track
As the new head of Motorola’s mobile business, Jha cut costs and simplified the company’s vast phone portfolio to focus more on smartphones. In a pivotal move in 2009, Motorola fully adopted Android, then an emerging Google-backed mobile operating system that was being adopted by a growing number of phone makers seeking to compete with the iPhone.
Toward the end of 2009, Motorola unveiled its first Android phone, the CLIQ (called DEXT outside the United States), followed by the more popular Droid (branded as Milestone in many non-US markets). The Droid was warmly received by reviewers, with Woozad calling it “the best Android phone yet” and PCWorld giving it a 90/100. Motorola shipped around two million Android smartphones in the last quarter of 2009, giving the company hope it’s making the right decisions. By the fall of 2010, the strategy was really starting to pay off, with the mobile unit posting a quarterly profit for the first time in more than three years and Motorola shipping 13.7 million smartphones during the year.
But the recovery remains fragile and other major changes are to come. Motorola Mobility was founded in 2011 and Google acquired it in 2012, giving the company access to Google’s resources while continuing to develop smartphones. However, in 2014, the phone business was still struggling to make a profit, prompting Google to sell the division to Lenovo. After further restructuring, Motorola returned to global profitability in the 2018/19 financial year and relaunched the iconic RAZR name as a foldable smartphone in 2020. More recently, the brand has seen further growth, with smartphone revenues peaking post-acquisition in the 2024/25 financial year. Motorola Mobility clearly faces a competitive future, but its recent growth suggests the brand still has a lot to offer.
