Motorola Xoom sales tepid; Production cuts next?
With Apple launching the iPad 2 Friday, Motorola Mobility may be forced to scramble to bolster sales of the Xoom tablet. — Jefferies analyst Peter Misek on Friday argued that earnings estimates for Motorola Mobility are too high …
Context & Ripple Effects
The Xoom opened Motorola's tablet war with Apple less than three weeks ago, positioned as the first credible Android challenger to the iPad at a hardware cost base inflated by its cameras and display, per researchers cited by the Wall Street Journal. Supply-chain reporting had Motorola on track to ship 700,000-800,000 Xooms in Q1, per a January DigiTimes forecast.
That trajectory is now under question: with the iPad 2 hitting stores Friday, Jefferies analyst Peter Misek is arguing that earnings estimates for Motorola Mobility are too high, and the blog flags production cuts as a possible next step if tepid sell-through persists — a rumor, not yet a company decision.
First-order effects
- Jefferies' call puts downward pressure on Motorola Mobility's consensus numbers heading into its first full quarter of Xoom shipments, exactly as the iPad 2 lands on shelves.
- Motorola faces an immediate pricing dilemma: the Xoom's component-heavy bill of materials limits how aggressively it can cut price without squeezing already-thin margins.
Second-order effects
- Suppliers feeding Xoom components — displays and camera modules among them — face order-risk if the rumored production trim materializes, echoing how weak end-demand transmits down the bill of materials.
- Rival Android licensees watching Xoom sell-through get a live test of whether any non-Apple tablet can hold share against an iPad refresh, shaping their own launch timing and pricing.
Third-order effects
- If first-mover Android tablets keep losing head-to-head against iPad launches, tablet economics shift toward whoever controls the cheapest integrated design — favoring vertically integrated players over component-assemblers licensing an OS.
The trend: The tablet market is consolidating around Apple's launch cadence, forcing Android entrants like Motorola into reactive pricing and production decisions within weeks of debut.