Google’s Motorola Unveils Moto X Phone to Revive Business

Aug. 1 (Bloomberg) -- Googles Motorola Mobility unit today announced a flagship Moto X smartphone with customizable colors, in an effort to revive the business after falling behind Apple and Samsung. Softbank Vapital's Nikhil Kalghatgi, Bloomberg Businessweek 's Sam Grobart and Bloomberg Contributing Editor Paul Kedrosky speaks with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Google Inc. (GOOG)’s Motorola Mobility unit today announced a flagship Moto X smartphone with customizable colors, in an effort to revive the business after falling behind Apple Inc. (AAPL) and Samsung Electronics Co.

The new 4.7-inch screen device is aimed at market leaders like the iPhone and the Galaxy S phones. The Moto X features “all-day” battery life, a choice of colors and materials, and an instant-start camera, the company said today at a press event in New York. The Moto X is priced starting at $199 with a two-year contract and will be available on all the major U.S. carriers by the end of August or early September.

The device is the first homegrown smartphone from Motorola since Google acquired the business last year for $12.4 billion, as the Internet giant ramps up its hardware ambitions against Apple and others.

Google is struggling to prove the value of the purchase with new products and features to regain sales Motorola has lost in recent years. Motorola had a small fraction of the smartphone market during the first quarter, while Samsung and Apple had almost half, according to Gartner Inc.

“This is a product and hardware brand that is in danger of falling into irrelevance,” said Carl Howe, an analyst at the Yankee Group. “They have a new owner, so they get a shot. They get to say, ‘We’re the new Motorola, not the old one.’ It’s going to be watched closely.”

Photographer: Scott Eells/Bloomberg

An attendee inspects Google Inc.’s Motorola Mobility Moto X phone during a launch event in New York, on Aug. 1, 2013. Close

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Photographer: Scott Eells/Bloomberg

An attendee inspects Google Inc.’s Motorola Mobility Moto X phone during a launch event in New York, on Aug. 1, 2013.

Fresh Start

“This is a relaunch of Motorola,” Dennis Woodside, chief executive officer of Motorola Mobility, said at the press event. “A year ago today, the Google team sat before a whiteboard and said, ‘What do we want to build? And how do we make it different?’ And this is it.”

Other features of the Moto X include a curved back and 10-megapixel camera. Similar to the trio of Motorola Droids introduced by Verizon Wireless last week, the Moto X runs on a chip system known as X8. Motorola developed twin lower-powered chips to run alongside the Qualcomm Inc. (QCOM) Snapdragon S4 Pro main processor.

The multichip system is designed to conserve battery life by letting the processor sleep while the lower-power chips work in the background -- sensing location, speed and message notifications, as well as listening for voice commands.

For example, even if the phone is locked, the user can say, “OK Google now,” to create and send a message, or open turn-by-turn navigation through Google Maps. And with two flips of the wrist, sensors will turn on the camera and be ready to shoot in 2 seconds, said Rick Osterloh, product chief for Motorola.

Photographer: Scott Eells/Bloomberg

Google Inc.’s Motorola Mobility Moto X phones are displayed during a launch event in New York, on Aug. 1, 2013. Close

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Photographer: Scott Eells/Bloomberg

Google Inc.’s Motorola Mobility Moto X phones are displayed during a launch event in New York, on Aug. 1, 2013.

U.S. Made

While smartphones are commonly manufactured in Asia, Motorola could woo U.S. customers with its plans to make the devices in Texas. The Moto X will be assembled by contract manufacturer Flextronics International Ltd. (FLEX) at a former Nokia Oyj facility in Fort Worth. Staffing the facility will require about 2,000 jobs, Woodside said in May.

Working initially with AT&T Inc. (T), customers can customize the colors of the front, back and accents of the Moto X on website Motomaker.com. The customization work is done in Fort Worth, and Motorola guarantees phone delivery in four days, said Osterloh. One of the custom options available is a wooden back made from a choice of rosewood, teak, bamboo or ebony.

“You can build this phone in 2,000 combinations,” Woodside said in an interview with Bloomberg Television. “By giving consumers the option to customize phones, that’s going to be fun and interesting.”

Overseas Carriers

Google plans to offer the Moto X to international carriers soon after it debuts in the U.S.

Motorola Mobility has been a drag on Google’s profitability. The division posted an operating loss of $342 million during the second quarter. Google, which makes most of its money from advertising, posted a total $3.12 billion in operating income during the last quarter.

Photographer: Scott Eells/Bloomberg

The new 4.7-inch screen device by Google Inc.'s Motorola Mobility unit is aimed at market leaders like Apple Inc.'s iPhone and Samsung Electronics Co.'s Galaxy S phones. Close

The new 4.7-inch screen device by Google Inc.'s Motorola Mobility unit is aimed at... Read More

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Photographer: Scott Eells/Bloomberg

The new 4.7-inch screen device by Google Inc.'s Motorola Mobility unit is aimed at market leaders like Apple Inc.'s iPhone and Samsung Electronics Co.'s Galaxy S phones.

Google has been streamlining the Motorola Mobility unit. The company has said it is cutting more than 5,000 jobs at the business. In December, the company agreed to sell the Motorola Home set-top box division to Arris Group Inc. for $2.35 billion.

Google shares rose 1.9 percent to $904.22 at the close in New York. The stock has climbed 28 percent this year, outperforming the 20 percent gain of the Standard & Poor’s 500 Index.

To contact the reporters on this story: Scott Moritz in New York at smoritz6@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net; Nick Turner at nturner7@bloomberg.net

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