This is What Verizon’s Largest Marketing Campaign Buys

Last Thursday, I went down to Union Square in downtown New York City and ran into Verizon’s marketing juggernaut for its new Droid phone.

The new Motorola device, which was released today to the general public, is being supported by the single largest marketing campaign that Verizon has ever launched for a single device.

So what does all that money buy? Well, lots of glitzy TV commercials but also some cheesy live marketing events. As I got off the train at Union Square, I noticed a long line of about 75 people. The people were waiting to get the chance to play a game in which you could scoop up a Droid phone in one of those boardwalk games with the little hand-operated cranes. All that was missing was a carnival barker shouting into a megaphone with a monkey perched on his shoulder.

Verizon is clearly pulling out all the stops to turn the Droid into a hit. And so far, it seems to be working.

Verizon: Who Needs the iPhone?

Verizon: Who Needs the iPhone?
To stay ahead of AT&T and Apple, Verizon is placing a big bet on Android smartphones and other new gadgets

By Spencer E. Ante

Can Verizon Wireless keep its spot as the leading wireless company in the U.S. if it doesn’t have the industry’s hottest phone?

Lowell McAdam, the company’s chief executive, is trying to make the case that it can. Two years ago, Verizon Wireless passed on the chance to become the exclusive U.S. distributor of the Apple (AAPL) iPhone and pushed Apple into the arms of rival AT&T (T). Since then the iPhone has become a megahit, helping AT&T close the gap with Verizon. In the most recent quarter, AT&T added 2 million wireless subscribers, bringing its total to 81.6 million, while Verizon Wireless added 1.2 million, for a total of 89 million.

Now, McAdam is launching a slew of products designed to keep Verizon ahead. In the fourth quarter the company is rolling out its largest new-product lineup ever: 14 devices, vs. half that number a year ago. Among those will be two netbooks and five smartphones, including the Droid phone from Motorola (MOT), a sleek device with a touchscreen and keyboard that runs on Google’s (GOOG) Android operating system. The new products are backed by an unusually aggressive marketing campaign. In one TV spot, Verizon takes direct aim at Apple with a series of “iDon’t” quips that explain all the things an iPhone can’t do. “The Droid can compete head to head” with the iPhone, says John Stratton, chief marketing officer of Verizon Wireless.

Check out the rest of my BusinessWeek story here, along with a video of me discussing the Droid launch. We’ve already got 44 comments on the story. Join the fray!

Behind the Droid Lauch: A New Motorola?

Who was the big winner of today’s much-hyped Droid launch?

Sure, the warm reception that the new Android-based smartphone is receiving is a big win for all of the parties involved: Verizon Wireless, Motorola and Android-maker Google. (Personally, I was impressed by the phone, and thought it represented a nice package of features, design and functionality.)

And the stock market seemed to agree. Today, Verizon’s stock was up nearly 3% and Motorola’s stock was up 1%, while the Nasdaq tanked nearly 3%. Google fell about 1.5%. And Apple took a hit, falling 2.5%.

[Verizon Wireless Chief Marketing Officer John Stratton and Motorola co-chief executive Sanjay Jha hold up the new Droid cell phone.]

But I’d venture to say that Motorola was the big winner, if only because the company was in such desperate need of a win. After all, the cell phone biz is a hits-based business. A best-selling product can reverse a company’s fortunes quickly, as Motorola has seen first with its popular StarTAC, and then with the Razr line of devices.

Since Motorola has bet the farm on Android, technologists and investors would have lost a whole lot more confidence in the company’s ability to manage a turnaround if it blew this launch. There was so much at stake with Droid that they had to nail it, or come close to nailing it.

At today’s unveiling at the W Hotel in New York City, Verizon Wireless Chief Marketing Officer John Stratton went out of his way to pump up the fallen icon. “This is a new Motorola,” said Stratton. “We took a chance, some would say a big risk at this early stage in their turnaround. But I am delighted at the level and quality of work. We will continue to work with Motorola.”

Motorola co-chief executive Sanjay Jha, who seemed nervous at first, grew more comfortable as the event wore on and the media got their hands on the devices. Next year, Jha said Motorola would release at least 20 Android-based handsets. The strategy, he said, is to offer more smartphones for the lower end of the market, as well as selling more devices around the world. “Android is evolving faster than any other platform,” said Jha.

For now, though, Jha was all about the Droid, claiming it was the world’s best current smartphone.

Stratton agreed wit Jha’s assessment, arguing that the Droid could “compete head to head” with the Apple iPhone. But he acknowledged that consumers would be the ultimate judge. “The market will tell us how well we did,” said Stratton.

Continuing Doubts About Motorola’s Turnaround

Poor Motorola. During an Oct. 30 conference call discussing the third-quarter results that included falling sales and a wider loss, Motorola’s new co-CEO Sanjay Jha outlined plans to reduce costs, streamline the way the company makes products, and delay a spin-off of the handset business.

But investors understandably aren’t that impressed. As I’ve said before, spinning off Motorola’s handset division will not help solve their problems–and it may even exacerbate them. Now, the company seems to be waking up to that fact.

My colleagues Olga Kharif and Roger Crockett wrote a story today focusing on Motorola’s continuing–and worsening–problems. 

“Motorola’s market share is likely to keep falling in the coming year, say analysts including Matt Thornton of Avian Securities and Ken Hyers of Technology Business Research. Thornton says the company’s share could dip to as low as 6% next year.”

Bottom line: Until Motorola rolls out some innovative new products that connect with consumers like Apple and Research In Motion have done, the company is destined for a long and slow decline.

Telecom Monday: Telcos Face the Credit Crunch and Moto’s New Android Phone

Today, BusinessWeek Online published two must-read stories. One, by my colleague Olga Kharif, breaking the news that troubled handset maker Motorola is hard at work developing its own Android-based device.

Writes Olga:
“Motorola has been showing spec sheets and images of the phone to carriers around the world in the past two months and is likely to introduce the handset in the U.S. sometime in the second quarter of 2009, according to people familiar with Motorola’s plans.”

The second story, written by me, explains why the telecom industry won’t be able to escape the wrath of the financial crisis.

Writes me:
“Although most analysts believe the damage won’t be nearly as bad as the last telecom bust—when hundreds of firms went bankrupt, including giant Worldcom—there is growing evidence that the financial crisis is going to depress the debt-heavy telecom industry. To start with, rising capital costs are likely to take a bite out of earnings. In addition, the softening economy will probably crimp demand for such telecom services as land lines, cell phones, and Internet connections.”

Can Sanjay Jha Turn Around Motorola?

My colleagues Roger Crockett and Olga Kharif published an interesting story handicapping Motorola’s new CEO, Sanjay Jha, the former chief operating officer of Qualcomm.

Roger and Olga say that Jha’s biggest most important task is dismantling the mobile-phone unit’s bureaucratic culture. I think that is incredibly important, too. But perhaps a more critical goal is to be a strong leader who can articulate a vision for the company and attract a new crew of talented executives. Because let’s face it, Motorola’s executive ranks have been decimated over the last few years, much like Yahoo! has seen an stock-crushing brain drain.

Jha can’t save Moto by himself, as Roger and Olga note lower down in their story. He needs more experienced and smart folks like himself. I’d keep a close on Moto over the next few months to see if Jha can lure some new hotshots back to Motorola. If so, that will be a very good sign that Jha has a fighting chance to breathe life back into this American icon.

Can a Merged XM-Sirius Survive in an iPod World?

It was a big week for news in the wireless world. BusinessWeek’s tech team visits dishes on the XM-Sirius merger, Sprint’s WiMax plans, and the fall of an American icon, Motorola.

Click here to see this Week’s Digital Dish. After changing our set virtually every week, I think have finally found an arrangement that may work. If you have any better ideas, please let us know!

Why Splitting Up Motorola Is a Bad Idea

This morning, Motorola, an 80-year-old tech icon with a history of innovation, announced it was splitting up the company into two pieces: its flagging cellphone unit is one piece and the other is its broadband and mobility operations, which make wireless networking gear and television set-top boxes. Motorola shareholders would receive stock in both companies.

I know Motorola shares are up 5% on the news. But this seems like a bad idea to me. Motorola’s number one problem at the moment is that its cell phone unit has not come up with a hit product in a few years since releasing the Razr phone to great fanfare in 2004. Separating the weak handset division, which accounts for about 53% of revenues, from the growing enterprise units is not going to solve those issues.

In fact, a split-up will probably exacerbate problems in the handset division. Instead of focusing on creating a great product, the company is going to be distracted by a messy break-up processs, a reverse merger in a sense. What’s more, the separated units will have fewer resources to invest in the future, and there will be the inevitable round of lay-offs. The most valuable remaining employees will probably bail the sinking ship and get another job. One more reason: Apparently, no major handset maker has any interest in buying Motorola’s cell phone unit. If this deal does go through shareholders are going to get a real low-ball valuation.

So why is the company doing this? Mainly because it seems like the most simple answer in the short term, I suppose. Carl Icahn has been hammering the company’s management, and its stock has plunged 45% over the last year. New CEO Greg Brown feels like he has to do something. The split-up creates the impression of forward movemement.

But the truth is there is no quick fix for Motorola. If Brown had cojones, he would keep Motorola together, double down on investment, and swing for the fences. This is not IBM or Hewlett-Packard, after all. It’s a $36 billion conglomerate with three divisions that all operate in basically the same business. Brown’s challenge is relatively straightforward and manageable. All he needs to do is come up with a hit product and Motorola will be fine. Isn’t that why people want to work in the technology industry? Instead Brown is taking the easy way out and putting one more nail in the coffin of an American icon, opting for financial engineering over product engineering.

Fact is, the wireless device business still has huge potential and growth opportunities. As the cell phone morphs into a true computing device, this is going to take a lot of innovation. Plus, as wireless networks open up in the U.S., power should shift away from the service providers to the device makers.

This is a sad day for American technology companies. Where is your courage and vision Greg Brown?