Brokerage Jefferies & Co. said losers at the Mobile World Congress (MWC) are HTC, Motorola Mobility Holdings, Nokia Corporation, Sierra Wireless, Novatel Wireless, PC original equipment manufacturers (OEM), and Sony Ericsson. The brokerage said the three major MWC themes are: the commoditizing power of Android for tablets, network of networks, and video optimization.

Motorola Mobility -- Searching for differentiation

Motorola Mobility had little new on the product front except fully functioning Xoom tablets. The display was excellent and the dock generally worked well though there were still some rough spots.

Xoom pricing: last week a supposedly leaked retail circular listed the Xoom at $1199. On Tuesday, Motorola Mobility comments defending its pricing premium to the iPad's $729 price were taken to confirm the +$1000 price point. But in the afternoon CEO Sanjay Jha confirmed the $799 price, which embeds the cost to upgrade the hardware to 4G. Motorola Mobility's business at Verizon is not worse than expected, according to Sanjay Jha.

$799 is still high (we feel the premium is unwarranted) but is not the disaster that $1199 would have been. Verizon appears to be firmly in the driver's seat regarding the Xoom's specs and pricing. The Xoom is not planned to be margin dilutive, but if the high price point restricts unit volumes, we would expect Verizon to lean on Motorola Mobility to cut prices, causing margin pressure, said Peter Misek, an analyst at Jefferies.

Motorola Mobility's has a three-pronged differentiation strategy, as presented in an analyst meeting with CEO Sanjay Jha: Targeting the enterprise via its recent 3LM acquisition, Stream and download content from the PC to mobile devices, Blur increasing customer loyalty via social networking aggregation and behavior analysis.

Misek does not believe that Google is focusing on #1 in the near-term but that #2 and #3 are prime targets for future updates of Android, leaving Motorola Mobility once again searching for other forms of differentiation. 3LM enhances Motorola Mobility's enterprise efforts but it still lags Blackberry maker Research In Motion (RIM) in terms of bandwidth efficiency and security.

Also, enterprise test cycles means that this is not a near-term source of upside for Motorola Mobility, in Misek's opinion. Motorola Mobility will come out with 7-inch, about 8.2-inch and 10-inch tablets with the 7-inch focused on Wi-Fi only.

Motorola Mobility is in talks with European carriers for a big promotional deal but nothing has been signed yet and they are far from anything substantial. But Motorola Mobility does expect to be back in Europe in a bigger way in second half. Fun fact: a Motorola Mobility survey shows that 33 percent of people think the iPhone 4 is 4G.

HTC -- Disappointing

Misek said HTC did not introduce any dual-core smartphones or a Honeycomb tablet.

Flyer tablet: Misek was particularly disappointed with the Flyer 7-inch tablet, which has a single core 1.5GHz processor, Android 2.3, 4 hours of battery life when playing video, no timing on Honeycomb upgrade, a stylus used for screen grabs and highlight (HTC unsure of timing of Chinese character input). The stylus seems extraneous and not fully implemented. The tablet is thin, but the product was still under glass as the User Interface is still not ready.

Updates phones: Desire S, Wildfire S, and Incredible S now have Android 2.3 and faster processors. Chacha and Salsa: new smartphones with dedicated Facebook button. Likely second quarter or later launch. Their User Interface is still under development.


Misek said the announcement last week appears to have taken many people by surprise including employees (who arrived at MWC with PowerPoint presentations for products now delayed/cancelled) and partners (Intel's booth was fronted by a three story MeeGo banner).

Misek said the speed of the deal coming together makes any 2011 Windows handset launched by Nokia likely a preliminary effort with no substantial volumes until 2012. Nokia's low-end phones will likely continue to sell while they do not have a competitive high-end offering.

We think the biggest share shift over the next year will be in the mid-range in Europe. We believe ZTE and Huawei will try to exploit this to their advantage and be aggressive on price. We think RIM and Motorola Mobility will also target Europe mid-tier share gains but with less price aggression, said Misek.

Novatel Wireless and Sierra Wireless

Samsung may launch an LTE mobile hotspot at Verizon around March, but this could also have been pushed back into second quarter as Misek believes was done with Novatel's LTE MiFi. Huawei had four 4G USB dongles and an LTE hotspot on display: E397 (LTE/CDMA for H2), LTE mobile hotspot (Japan, H2), E398 (in final testing at Vodafone).

Sierra's and Novatel's Asia competitors appear to have quickly developed LTE products, which will likely lead to pricing pressure.

For example, we expect Vodafone to award their USB RFP shortly, but the presence of Huawei in the final portions of the bakeoff does not bode well for pricing. Smith Micro Software should be able to benefit from the overall ramp of LTE USB dongles once Verizon clears its inventory, said Misek.

PC OEMs -- Lag in tablets

HP's new tablet was not available for hands-on use, and HP employees demoing the units refused to show Flash. Dell had a small presence.

Acer's tablet had a very large bezel compared to other tablets and was running Froyo but was expected to be upgraded to Honeymoon soon.

Sony Ericsson -- Unimpressive new phones

Xperia Play smartphone (expected) is also known as the Playstation phone. Fifty games are promised for launch. Its graphics and speed were unimpressive, but are supposed to improve with the final software version. We are doubtful, said Misek.

Xperia Pro smartphone (unexpected): new slide out qwerty keyboard designed for prosumer market.

Xperia Neo and Arc smartphones: the Arc was introduced at CES, and the Neo was an unexpected mass market consumer focused version introduced at MWC. Both are slow. Launch expected in Western Europe in first quarter and maybe in the United States in first quarter but dependent on the carrier's timetable.

LG -- Trying for a 3D niche

Misek said LG fell behind in 2010 with an inferior smartphone offering but is attempting a comeback this year by differentiating based on 3D.

Optimus 3D phone was interesting but not amazing. The 3D screen does not require glasses, is fairly crisp, is not too dark, and has a decent field of vision. But due to the small screen size of a handset, it does not provide an immersive experience and lacks a wow factor.

Optimus Pad tablet was good but not as light as Samsung's 10-inch tablet. 2X smartphone (expected) with a dual-core Tegra 2 and the Optimus Black smartphone (unexpected) were solid but not exceptional.

ZTE -- Smartphones gaining share in Europe

Europe: ZTE’s Blade smartphones are doing well in Europe, especially in the United Kingdom and France, with consumers finding their combination of solid build, decent specifications, bright screen, and a low price quite compelling.

All of ZTE's Europe smartphone sales have been pre-paid and direct-to-carrier to date, but Misek believes they are exploring greater indirect distribution, which could increase their share even further. Misek does not expect a large US presence any time soon. Honeycomb 7-inch tablet is expected in the second half. No others planned in the near-term.

Huawei -- Continues coming on strong in telecom equipment

USB dongles and hotspots: Huawei had four 4G USB dongles and an LTE hotspot on display (E397 TLE/CDMA for H2), LTE mobile hotspot (Japan, H2), E398 (in final testing at Vodafone).

Equipment: the improved performance of Huawei's products, its higher profile, and more established customer relationships has allowed Huawei to be less aggressive with vendor financing.