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Motorola's Rick Osterloh on the Mobile Industry's Seven-Year Itch

Expect some turnover among the market leaders.

Asa Mathat

The mobile world is heading into the industry’s equivalent of the seven-year itch, Motorola Mobility President Rick Osterloh said, and today’s leaders will likely cycle out.

BlackBerry is the most recent example of this phenomena, going from addictive and ubiquitous “Crackberry” to near irrelevance over that period, Osterloh said in his interview with Re/code’s Walt Mossberg Tuesday at the Code/Mobile conference. Similarly, Samsung, the smartphone leader by market share, is also showing signs of weakness.

“Samsung is wobbling right now,” Osterloh said. “Will they still be a market leader in seven years? It’s really hard to say.”

The sentiment is all the more poignant coming from the head of a company that invented the modern wireless era. Motorola’s StarTac and Razr phones were iconic devices that defined how consumers communicated with one another. Apple’s 2007 introduction of the iPhone wiped Motorola from the market.

Though it may not dominate the mobile market as it once did, this faddish churn in the mobile industry represents an opportunity for a resurgent Motorola, according to Osterloh, who spoke about the company’s rebound from its “near-death experience” prior to its 2011 acquisition by Google. It has dramatically slashed headcount and winnowed its product line.

“We’re growing at over 100 percent a year,” Osterloh said. “We introduced the leader in value phones with the Moto G, which is our best-selling smartphone of all time. The turnaround has happened because we started making great products again.”

To be sure, Motorola is starting off a small base — a three percent share of the global market.

The Moto G has allowed Osterloh to carve out a place for Motorola in the emerging markets with a smartphone priced under $200. The Moto X has seen early success in emerging markets such as Brazil, where it holds a 20 percent market share, and in India, where it has risen to the No. 4 spot among smartphone makers.

Osterloh said Motorola’s pending $2.9 billion acquisition by Lenovo would accelerate the smartphone maker’s comeback — especially in the Asia-Pacific region.

“Lenovo has a huge China business, a great business throughout the Asia-Pacific and Europe,” Osterloh said. “Right away, Motorola will be all over the world. It will double the number of countries today.”

Osterloh said he will remain with the new company and will be head of the Lenovo division.

Innovation also will play a key role in Motorola’s revival. He cited the Moto 360 smartwatch as an example of a rekindling of the company’s innovative spirit. Such devices have yet to catch on with consumers, but Motorola hopes its watch, which looks more like a traditional timepiece, will hold more appeal than its Android competitors.

This device, Osterloh claims, has greater sex appeal.

“It was not easy to make square components fit in a round thing,” Osterloh said. “We decided about a year ago — maybe a bit more — that watches had to be round for it to be adopted by people who aren’t just interested in the tech.”

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