After Moto X, a new phase in Motorola’s strategy

Aug 01, 2013
X marks the spot.

FORTUNE -- Executives from Google and its Motorola Mobility handset maker unveiled a new premium phone, Moto X, in New York on Thursday. But Dennis Woodside, Motorola's CEO, and Google Chairman Eric Schmidt say they are eager to deliver lower-priced smartphones to what Woodside calls the "super value segment."

"If I'm a middle-class mother in Brazil I might not be able to afford an iPhone or a Galaxy," Woodside says. But those consumers would clearly benefit from the applications and broadband access that an entry-level smartphone would provide. Google's Android OS already powers a wide variety of devices from rival manufacturers, many of them aimed at such consumers.

Woodside characterized the Moto X as the first high-end phone Motorola has launched since Google (goog) acquired the company in 2012. The phone, which features a suite of voice-activated controls and an "active display" feature that pushes key pieces of information onto the screen while it is in "sleep" mode, will be available in the U.S. in late August or early September on all major carriers.

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But Woodside and Schmidt are keen to capture the billion or so users of mobile phones who presently don't have Internet access on their devices. Motorola wins sales and new customers if it is able to convert those customers to smartphones, but more crucially, Google benefits by broadening the pool of consumers who may do mobile searches. "It is strategically important for us to serve this end of the market," Schmidt says.

While Woodside and Schmidt didn't offer any details on pricing or profit margins for such phones, Motorola's "super value" gambit is reminiscent of its Android strategy: Google does not charge handset manufacturers to use its Android operating system for mobile phones. From the outset, the aim was to proliferate the world with smartphones, thereby encouraging consumers to use their phones for search, maps, email, and other Google products. Android is currently the leading smartphone operating system worldwide, with 80% market share, according to research from Strategy Analytics.

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