Motorola (MOT) has seen a steep decline in its mobile phone market share over the past few years from an estimated 22% in 2006 to around 4.5% in 2009. 
The main reason for this decline is Motorola’s lack of standout handsets and a delayed start on its smartphone push resulting in competitors like Research in Motion (RIMM), Apple (NASDAQ:AAPL), Nokia (NYSE:NOK), and Google (NASDAQ:GOOG) taking market share.
We forecast Motorola’s declining market share trend to reach 1.6% by 2017. In comparison, the Trefis community expects share to stay around 3% suggesting a potential 20% upside to our current price estimate for MOT stock. This illustrates how sensitive the stock is to Motorola’s mobile phone market share.
We currently have a Trefis price estimate of $8.30 for Motorola’s stock, which is inline with its current market price.
Market Share Squeeze
Motorola doesn’t have any leading smartphones that can compete with RIM’s BlackBerry in the enterprise market or Apple’s iPhone in the consumer market. Its last hit was the RAZR handset that helped it gain market share that reached 22% in 2006. In recent years, it has struggled with new handsets and its limited offerings in 3G led to market share declines in North America.
In addition to competition from established players like Nokia, Apple, Samsung (OTC:SSNLF) and Sony Ericsson, Motorola is facing competition from newer Chinese players like ZTE and Huawei in the lower priced handset market, which is taking share in the lower priced handset market.
We recently wrote an article suggesting that Motorola needs a successful smartphone launch priced below competitors like Apple and RIM. (See "What Could a $100 Smartphone Mean for Motorola?") Additionally, we suggested that Motorola’s launch of Motoblur will also helps its smartphone push. Motoblur is a modified version of Google’s Android OS that supports popular applications like Facebook and Twitter. (See "Can Motorola’s Motoblur Turn the Tide?")
The Trefis community forecasts that Motorola’s mobile phone market share will stay around 3% in the medium term compared to the Trefis estimate of a decrease from 2.5% to 1.6% during the same period.
If the market share indeed reaches the Trefis community’s forecast on the success of recent initiatives, this would imply an upside of 20% to the $8.30 Trefis price estimate for Motorola’s stock.
- Calculated as (Total Mobile Phones Sold) / (Global Mobile Phones Market). Motorola reports total mobile phones sales in its SEC filings. We’ve taken global mobile phones market data from Gartner
Disclosure: No positions