Motorola's Droid 2: The Product Manager's Dilemma

Abstract

After it introduced the extremely successful Droid smartphone into the market in 2009, Motorola quickly moved to develop the next-generation Droid 2 before the next wave of smartphones (including the rumored iPhone 4) flooded the market. The development process was moving smoothly for the company when Verizon, its biggest partner, dropped a bombshell. It wasn't happy with the mechanical camera button on the Droid 2 (citing customer feedback) and wanted it to be changed to a software button like the iPhone's. This request immediately placed Motorola in the proverbial horns of a dilemma. On the one hand, it couldn't brush away the request of its biggest and most important partner. On the other hand, changing the camera button now would mean delaying the Droid 2's entry into the market. Should the Droid 2 team remove the camera's hardware button in favor of a software button per Verizon's request, or not?

John Smith, the product manager, leads the cross-functional Droid 2 team. The case setting is an emergency “war room” meeting to address this critical issue, just weeks prior to launch. John's objective is to obtain the salient facts and opinions of team members quickly so he can make an informed recommendation to his boss by the end of the day. He is concerned that this last-minute request for a design change will not only threaten to delay the launch, which would have significant financial implications, but could potentially create deep fissures in a hitherto effective team that had been running like a well-oiled machine.

The case puts students in a situation that simulates a real-world discussion and allows them to experience what it is like, as a product manager, to orchestrate a meeting with cross-functional teams that have conflicting priorities and agendas. It illustrates the challenges a product manager faces while striving to make important decisions with little or no direct authority over the various teams.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Resources

Exhibit 1: Motorola Droid 2 Mechanical Camera-Button Design and Assembly

Source: Preliminary design concept by Motorola industrial design team.

Figure

Exhibit 2: Top Reasons for Customer Returns of Motorola's Droid Smartphone, from Verizon

Figure

Exhibit 3: The Original Motorola Droid

Figure

Exhibit 4: Motorola Income Statement (US$ in millions)

Period ending:

31–Dec–09

31–Dec–08

31–Dec–07

Total revenue

22,044,000

30,146,000

36,622,000

Cost of revenue

14,987,000

21,751,000

26,670,000

Gross profit

7,057,000

8,395,000

9,952,000

 Operating expenses

 Research and development

3,183,000

4,109,000

4,429,000

 Selling, general, and administrative

4,022,000

4,330,000

5,092,000

 Nonrecurring

2,347,000

615,000

 Others

369,000

 Total operating expenses

10,505,000

Operating income or loss

–148,000

–2,391,000

–553,000

 Income from continuing operations

 Total other income/expenses, net

115,000

–22,000

528,000

 Earnings before interest and taxes

–165,000

–2,413,000

–25,000

 Interest expense

224,000

365,000

 Income before tax

–165,000

–2,637,000

–390,000

 Income tax expense

–77,000

1,607,000

–285,000

 Minority interest

–23,000

 Net income from continuing ops

–88,000

–4,244,000

–105,000

 Nonrecurring events

 Discontinued operations

60,000

56,000

 Extraordinary items

 Effect of accounting changes

 Other items

Net income

–51,000

–4,244,000

–49,000

Preferred stock and other adjustments

Exhibit 5: Mobile Web Usage by Smartphone Platform

Figure

Exhibit 6: Motorola Droid 2 Project Plan as of April 16, 2010

Notes: (1) This fictional project plan was fabricated for the purposes of this case. As such, it does not represent Motorola's actual development process or its cycle times.

(2) Marketing roll-out is for final phase only.

(3) Although set in a “new product development” environment, this case is not meant to illustrate the NPD process.

Figure

Exhibit 7: Motorola Droid 2 Core Team

Team Member

Team Role

Personality

Norrin Radd

Sr. Verizon Support Lead

Norrin was a level-headed “can-do” guy with exceptional technological depth and breadth who inspired confidence in customers.

Jeanette Freeman

Marketing Lead

Jeanette was a creative marketing whiz with proven success (and credibility) from the original Droid launch. She was smart, outgoing, and confident—almost arrogant, except for her self-deprecating sense of humor.

Dave Gorzynski

Industrial Design Lead

Dave was a creative thinker but somewhat temperamental in his working relationships.

Christina Daniel

Engineering Lead

Christina was a brilliant engineer and natural leader—and a perfectionist.

Namor McKenzie

Supply Chain Lead

Namor was sharp and effective, an ambitious “up-and-comer” within the supply chain organization, though some thought he was too ambitious.

Sara Buntings

Verizon Account Manager

Sara was a type-A powerhouse who got things done and was well respected by Verizon and Motorola management.

John Smith

Product Manager

John was a dynamic entrepreneurial product leader who was customer-aware and tech-savvy. He was an exceptional communicator and was well-practiced at “herding cats.”

Ram Kumar

Executive Sponsor

Ram was a strategic product thinker and exceptional people manager who was three steps ahead. He commanded C-level respect within Motorola and was quietly influential across the entire organization.

Exhibit 8: John Smith's “War Room” Meeting E-Mail

To: Droid 2 Core Team Lead April 16, 2010

From: John Smith

Subject: DROID 2: EMERGENCY WAR ROOM MTG TODAY@3PM

We have a RED FLAG ISSUE regarding the Droid 2 camera button that we need to address immediately (see below). Because it applies to all of you, please attend the emergency “war room” meeting at 3:00 p.m. today. Please come prepared to address the bullet points listed below that relate to your team. It is vital that we come to a resolution on this ASAP, particularly after being told by senior leadership just last week that they were very satisfied with the current progress on the Droid 2. Let's not forget senior management's reminder about the importance of the Droid 2 as a crucial product for Motorola's overall financial performance in 2011.

Yesterday, Verizon told Norrin and his customer support team that Droid end users complained about the camera button, and they want this addressed in the Droid 2. Specifically, Verizon said that the button was too big and its tactile feel was not crisp. Verizon is worried that this issue, if not addressed, would negatively affect average sales price per unit (by an estimated 20 percent) and initial shipping volume (by an estimated 10 percent), and they suggested that it could negatively impact their co-marketing budget for the Droid 2. In addition, Verizon is indicating that end users prefer a software button on the display (iPhone 3's approach).

Because this change could impact the shipping date and volume, we need to respond with a suitable action plan ASAP. Some questions we need to answer:

  • Camera button:
    • What was the user trial feedback on the camera button for the Droid?
    • Is the Droid 2 camera button significantly different from the Droid's?
    • Do we have internal usability data about a mechanical camera button versus a software button? Any benchmarking data?
    • How can we improve the tactile feel of pressing the camera button?
  • Market dynamics:
    • How important is the mechanical button as a differentiator vs. the iPhone?
    • What is the market window? What would a one-week, two-week, four-week, or six-week slip mean?
  • Technical considerations:
    • Do we have alternative solutions to make a better camera-button design?
    • What would be the implications if we were to remove the button?
    • What additional resources would be needed to make the change and stay on schedule?
    • Ultimately, what is the impact on the schedule?

To answer these questions, please gather the relevant information from your team for the 3:00 p.m. meeting today. I've listed the information that I think is needed from your team in the bullet points below—but please bring any critical additional information that will help us make an informed decision.

Customer support team:

  • April 15 Verizon meeting briefing
  • Significance of this issue
  • Verizon's expectations
  • Customer support's recommendation

Marketing team:

  • Impact of a one-week, two-week, four-week, or six-week slip?
  • Droid user top complaints
  • Internal user trial feedback on Droid
  • Relevant market research data, if any
  • Droid 2 marketing schedule and life cycle

Industrial design team:

  • Design difference between Droid and Droid 2
  • From a design perspective, tradeoffs of mechanical button vs. software-only button
  • Estimated schedule impact for any design change

Engineering team:

  • Available camera-button types in the market
  • Impact of a software-only button
  • Recommendation of an alternative, if appropriate
  • Dependency and estimated schedule impact

Supply chain/manufacturing:

  • Current inventory status and production plan
  • Supplier delivery and cost impact if design change occurs
  • Recommendation for production schedule and part delivery

Account manager:

  • Will Verizon be carrying the iPhone 4 in the future?
  • Impact on Droid 2 volume and long-term relationship if we don't make the change
  • Recommendation

Please be prepared to answer these questions, and bring any other questions or information that will help us resolve this issue efficiently. We should build consensus and move quickly.

Best regards,

John

Exhibit 9: Droid 2 Customer Value Proposition

“FROM SMARTPHONE TO GENIUS DEVICE”

Whether being used as Wi-Fi mobile hotspots or mobile PCs, DROID 2 by Motorola are juggernauts at both work and play. With their powerful 1 GHz processors and Android 2.2 operating system with Adobe® Flash® Player 10, these phones allow the kind of access to the web that only Flash-supported phones can offer. And with their intuitive QWERTY keyboards and expandable memory (up to 40 GB), they have the tools to turn you into a web-rocketing, message-crafting, super you.

Source: Motorola.com (accessed June 1, 2011).

Exhibit 10: Benchmarking Comparison, Select Smartphones

Figure

iPhone 3GS

Palm Pre

myTouch 3G

Droid

Carrier

AT&T

Sprint

T-Mobile

Verizon

Technology

GSM/WCDMA

CDMA

GSM/WCDMA

CDMA

Display

3.5″

3.1″

3.2″

3.7″

Storage

16GB

8GB

4GB

16GB

Camera

3.0MP

3.0MP

3.2MP

5.0MP

External camera button?

No

No

No

Yes

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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