Amid a boom in social-network-friendly handsets, Motorola prepares a new entry, but its Android may not debut until 2009's second quarter
As the wireless world awaits the Oct. 22 debut of the first phone based on the Google-backed Android software, engineers at Motorola (MOT) are hard at work on their own Android handset. Motorola's version will boast an iPhone-like touch screen, a slide-out qwerty keyboard, and a host of social-network-friendly features, BusinessWeek.com has learned.
Motorola has been showing spec sheets and images of the phone to carriers around the world in the past two months and is likely to introduce the handset in the U.S. sometime in the second quarter of 2009, according to people familiar with Motorola's plans. Building a phone based on the highly anticipated Android operating system is part of Motorola's effort to revive a loss-making handset division that has forfeited market share amid a drought of bestselling phones. Motorola stock, which on Oct. 17 rose a penny to 5.62, is hovering near a 16-year low.
The phone will appear among a new class of social smartphones designed to make it easy for users to connect quickly and easily to mobile social networks such as Facebook and News Corp.'s (NWS) MySpace (BusinessWeek, 10/10/08). Such phones let users message in-network friends directly from phone contact lists, for example. A Facebook representative declined to comment on the company's work with Motorola. MySpace.com didn't respond to a request for comment.
Motorola declined to elaborate on its plans, but said in a statement: "We're excited about the innovation possibilities on Android and look forward to delivering great products in partnership with Google (GOOG)" and the community of developers known as the Open Handset Alliance that are working on the Android operating system.
Mobile Networking Wave
In the next year, social networking phones are expected to be a hit with the 16- to 34-year-old crowd, analysts say. According to consultancy Informa (INF), the number of mobile social-networking users will rise from 2.3% of global cell-phone users at the end of 2007 to as many as 23% of all mobile users by the end of 2012.
The Android handset will feature a touch screen about the size of those on Apple's (AAPL) iPhone, people familiar with the phone say. While it takes some of the design cues from Krave ZN4, the first touch-screen phone from Motorola launched with Verizon Wireless on Oct. 14, it's not certain whether the Android phone screen will feature Krave's distinctive and interactive clear flip screen.
Like the world's first Android phone, from HTC, Motorola's Android-based device will offer a slide-out Qwerty keyboard. People who've seen the pictures and spec sheets for the device say it looks like a higher-end version of the HTC phone, called the T-Mobile G1. But it's expected to sell for less, at prices similar to the Krave, which is available for $150 with a two-year contract. After carrier subsidies, the G1 will retail for $180 with a two-year contract.
Slow Off the Mark
Motorola's new phone likely won't be ready to launch in the U.S. until the second quarter of next year, say people who are familiar with it. And it may not be available in Europe until the third quarter of 2009. Many analysts have been expecting Motorola to roll out an Android phone in December or January.
Any delay gives competing Android phones a chance to gain traction. London-based INQ will unveil its social-networking phone, INQ1, in Britain and Australia in about a month (BusinessWeek, 10/09/08). The slider phone, which integrates Facebook features into its address book and camera, is expected to enter the U.S. market next year. And Nokia (NOK), the world's largest cell-phone maker, has already begun adding connectivity to its media-sharing site Ovi in some of its higher-end phones. "The sooner [Motorola] comes out with a social phone the better," says John Jackson, an analyst with the Yankee Group. "The more you wait, the more distance gets put between you and the rest of the world."
In the handset business, a best-selling product can reverse a company's fortunes quickly, as Motorola has seen first with its popular StarTAC, and then with the Razr line of devices. "Motorola still has global carrier and distribution relationships" to rival those of most competing players, says Jackson. Motorola also has a relationship with industry innovator Apple, and may be able to offer iTunes downloads for upcoming phones, says Moe Tanabian, principal at researcher IBB Consulting. Music downloads may appeal to the same category of consumers that is expected to buy social phones.
The Android project is getting a lot of attention and support directly from Motorola's new co-chief executive officer, Sanjay Jha. The Android phone—likely one of a series of Android handsets Motorola is cooking up—is the brainchild of people who joined Motorola via its 2006 acquisition of Good Technology. Good specialized in enterprise wireless messaging, data access, and security software used in such products as Motorola's Q line of smartphones. The project is headed by Rick Osterloh, vice-president and general manager for Android products and formerly Good's vice-president of marketing and product management.
Motorola is looking to add staff to its Android project in California, where the Good team is based. Applicants are invited to work on a "social smart phone." One posting for a software engineer on job board Monster.com reads: "We are a new start-up division within Motorola with strong executive level sponsorship, a 50M+ budget for our Android platform. Our new CEO, Sanjay Jha, has been in the forefront of the formation of the Android Open Handset Alliance!"