Wednesday October 28, 09:15 PM
UPDATE 3-Motorola Droid comes with navigation, big ad spend
By Sinead Carew
NEW YORK, Oct 28 (Reuters) - Motorola (NYSE: MOT - news) 's Droid phone will sport new software from Google Inc
(NASDAQ: GOOG - news) that threatens navigation devices by Garmin (NASDAQ: GRMN - news) and TomTom (Amsterdam: TOM2.AS - news) and could help win back market share lost to the iPhone.
One of the newest features of the Droid is Google Maps Navigation, which offers real-time, turn-by-turn walking or driving directions.
The news helped push TomTom shares down 21 percent as the navigation device maker also warned of more price declines. Garmin shares fell 16 percent.
The Droid will go on sale on Nov. 6 and cost $199 for people who commit to a two-year service contract, said Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc.
Verizon (NYSE: VZ - news) has exclusive U.S. rights to the phone, the first to use Google's Android 2.0 software.
The leading U.S. mobile provider said it will promote the device with its biggest marketing campaign ever -- giving Motorola a good chance to improve its sales, analysts said.
Verizon Wireless Chief Marketing Officer John Stratton said the Droid would hold its own against iPhone even as he conceded that Apple (NASDAQ: AAPL - news) had revolutionized the mobile industry.
'We have to demystify the notion that (iPhone's) untouchable,' Stratton told reporters at the launch event in New York. 'This product can stand up and compete.'
Stratton said the Droid is the first in a range of Motorola Android phones from Verizon Wireless, as it looks to regain ground lost to AT&T Inc, the U.S. iPhone provider.
The Droid is a massive bet for Motorola, which after losing market share to rivals for more than two years has reorganized its entire mobile business around developing Android phones.
'In terms of the rejuvenation of mobile devices, this is an important next step,' Motorola Chief Executive Sanjay Jha told Reuters. 'We're ready to produce very large volumes.'
Motorola said the Droid is the thinnest phone to feature a slide-out QWERTY keypad. It sports a five-megapixel camera, a high-resolution screen, fast chips from ARM Holdings (LSE: ARM.L - news) and Texas Instruments (NYSE: TXN - news) , and a day's battery life.
Android 2.0 works with Microsoft (NASDAQ: MSFT - news) 's Outlook, making it more attractive for business users. Google said it expects other phone makers to support the new Android version soon.
AD CAMPAIGN
Verizon's marketing weight will 'make a huge, huge difference' in helping Droid sales, said Michael Gartenberg, an analyst for market research firm Interpret.
Verizon spent $2.4 billion on advertising in 2008, according to TNS Media. The company recently started showing Droid video ads highlighting its advantages over iPhone.
'We're everywhere with this,' Stratton said, declining to disclose the exact marketing spend for Droid. 'You won't be able to avoid it.'
Stratton said the phone's relatively large size might appeal more to men than women.
Gartenberg expects pent-up demand because it is the first time Motorola customers would be able to use an Android device on the Verizon network.
'As long as it's not buggy, it will do quite well,' Current Analysis analyst Avi Greengart said. 'I don't think this will single-handedly save Motorola but it's a crucial step.'
Greengart said that while the navigation feature will not stop consumers from buying dedicated GPS devices, it could put pressure on companies like TomTom and Garmin to cut prices.
The navigation service will respond to voice commands and displays Google's online street photo archive. Users can choose 'layers' to add to maps, including traffic conditions, or data about local stores or points of interest.
TomTom shares finished down 21 percent at 8.11 euros, while Garmin shares closed down 16 percent at $31.59. Motorola shares rose 0.8 percent to $7.96, Verizon shares rose 2.6 percent to $29.95, while Google shares fell 1.5 percent to $540.30.
(Additional reporting by Alexei Oreskovic in San Francisco and Paul Thomasch in New York, editing by Tiffany Wu, Matthew Lewis, Tim Dobbyn) Keywords: MOTOROLA/DROID
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