The amount of competitive new launches near-term is making it a little bit tougher for Motorola Mobility (NYSE:MMI), especially for its Xoom tablet.
While we think the new Xoom is a worthy contender with strong hardware features, the uptick may be below our initial expectations, RBC Capital Markets analyst Mark Sue wrote in a note to clients.
Some of the slower-than-expected adoption of the Xoom may be due to pricing, strength of the iPad 2 launch, and limited differentiation due in part to its being an initial Google Experience Device (Xoom does not come with MotorBlur).
Another competitive dynamic that weighs on Android tablets is the lack of a competitive iTunes-like solution to readily purchase video.
In addition, digital rights management disputes have thus far prevented the likes of Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Blockbuster from allowing users to download video content directly to Android Honeycomb tablets.
Meanwhile, Apple's iPhone is doing reasonably well at Verizon (NYSE:VZ), but the featured Android device seems to be the HTC Thunderbolt.
The analyst's checks at AT&T (NYSE:T) show decent trends for the Motorola Atrix, yet it is ranking below the Samsung Captivate and the HTC Inspire.
Meanwhile, Motorola may have seen a smaller than anticipated impact from the Apple iPhone launch at Verizon. Yet the flagship Android device at the moment at Verizon is the HTC Thunderbolt, which is commanding a price premium of $249.
Motorola's Bionic is coming to Verizon soon, but the strength of the Thunderbolt near-term is difficult to ignore, Sue said.
Meanwhile, AT&T has placed significant promotion around the $199 Motorola Atrix 4G with its 4.0 screen, which has performed reasonably well but has since been challenged by the $99 HTC Inspire 4G with its 4.3 screen.
For the first quarter, analyst Sue cut Motorola's estimates modestly from 9.9 million units to 9.2 million units with 3.5 million Android units and 150,000 Xooms.
The analyst also revised his first quarter loss target to 13 cents a share from 14 cents a share and revenue estimate to $2.68 billion from $2.82 billion. Wall Street expects a loss of 13 cents a share on revenue of $2.84 billion, according to analysts polled by Thomson Reuters.
For the second quarter, Sue's slashed his total unit estimate to 10.5 million from 10.9 million. Smartphone unit estimates decreased to 4.5 million from 4.8 million and tablets estimates cut to 300,000 from 400,000.
The analyst also lowered his revenue estimate to $3.02 billion from $3.10 billion, while the Wall Street consensus is $3.14 billion.
For 2011, the analyst trimmed his earnings estimate to 40 cents a share from 41 cents a share and revenue forecast to $12.73 billion from $12.95 billion. Street expects earnings of 94 cents a share on revenue of $13.22 billion.