Potential Upside to Motorola from Growing Mobile Phone Prices

-48.13%
Downside
40.80
Market
21.16
Trefis
MMI: Motorola Mobility logo
MMI
Motorola Mobility

Motorola Mobility’s (NYSE:MMI) mobile phone pricing was depressed from 2006-2009, hovering in the range of $120 to $140. But its average mobile price spiked to $200 in 2010 driven by the introduction of a series of smartphones like Cliq and Droid based on the Android operating system.

Motorola competes with Apple (NASDAQ:AAPL), Research in Motion (NASDAQ:RIMM) and Nokia (NYSE:NOK) in the mobile phone market. We expect Motorola’s phone prices to elevate in the near term and fall back to current levels by the end of Trefis forecast period. Trefis members however expect prices to reach $300, representing an upside of 12% to our price estimate for MMI stock.

We currently have a price estimate of $25.45 for Motorola Mobility’s stock.

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Increasing Mix Shift Toward Smartphones

Smartphones could push Motorola’s average mobile phone pricing up, depending on how many smartphone units the company is able to sell. Motorola has offered more than 20 smartphones in 2010 which are Android-based. Some of the more popular models include Cliq, Bravo, Droid, Xoom and Moto. Droid X is getting good reviews and has been regarded as one of the top 10 smartphones for 2011 in terms of design, multimedia and memory features.

To succeed, Motorola needs to maintain this momentum in the future as well, given competition from bigger and stronger players like Apple, RIM and Nokia that have a wider choice of smartphones and a greater share of the mobile phone market. Additionally, Motorola is also competing with a rising number of Chinese mobile handset vendors like ZTE and Huawei, who are offering comparable quality handsets at cheaper prices.

See our full analysis and $25.45 price estimate for Motorola Mobility

Trefis Community Forecast

Trefis community members forecast that Motorola’s mobile phone pricing will increase from around $214 in 2010 to $301 by the end of our forecast period, compared to the baseline Trefis estimate of an increase from to $227 during the same period. The member estimates imply an upside of 12% to the $25.45 Trefis price estimate for Motorola Mobility’s stock.