Motorola Unveils Lower-Priced Moto G Amid Sluggish Sales

Google Inc. (GOOG)’s Motorola Mobility unit unveiled a lower-cost smartphone, seeking to jump-start sales by targeting consumers who can’t afford higher-end devices from bigger rivals.

The Moto G will cost $179 in the U.S. without a wireless contract, compared with more than $600 for some other premium devices, the company said. The phone will be sold in more than 30 countries and aims to pack enough power, screen resolution and features to make it a real alternative at an affordable price, said Motorola Chief Executive Officer Dennis Woodside.

“When we looked at the smartphone market, we actually think the industry has really failed 5 billion people,” Woodside said in an interview. “With Moto G, you’re going to have consumers who have not had a smartphone before.”

Motorola is seeking to win back market share lost as buyers opted for sleek, heavily marketed handsets from Apple Inc. and Samsung Electronics Co. Motorola’s third-quarter revenue fell 34 percent, even as the company began selling Moto X, the first smartphone introduced since its acquisition by Google last year. It accounted for just 1.7 percent of global smartphone shipments in that period, according to Strategy Analytics.

The mobile-phone industry is projected to expand 5.2 percent in 2014 after 3.7 percent growth in 2013, according to researcher Gartner Inc. The increase is being driven by middle-market and lower-priced smartphones based on Google’s Android operating system, Gartner said.

“The opportunity for high-average-selling-price” smartphones is ending, Gartner said in a report last month. “Growth is expected to come from mid-tier smartphones in mature markets and low-end Android smartphones in emerging markets.”

More Countries

Motorola has broadened the geographic rollout for Moto G after selling the Moto X in less than 10 markets at its introduction in August. The new device goes on sale in Brazil and parts of Europe today, and will become available over the coming weeks and months in other countries, including the U.S. in early January.

The new device sports a 4.5-inch high-resolution screen, slightly smaller than some of its higher-end rivals. It runs on a Qualcomm Inc. (QCOM) chip that is less powerful, yet can still run multiple applications at the same time, Woodside said. The Moto G comes with 8 gigabytes of memory included, or 16 gigabytes at a higher cost. Pricier smartphones typically start at 16 gigabytes.

The company’s Moto X is now offered broadly for about $100 with a two-year contract, about half earlier prices, and starts at around $450 without a contract. Unlike the X, The Moto G doesn’t feature long-term evolution wireless technology, which provides the fastest network speeds.

Jelly Bean

Moto G also is more limited in its choices for colors and cases than Moto X, saving on manufacturing costs, said Woodside, who is in Brazil today to unveil the phone.

The new device initially will run on Jelly Bean, an older version of Android. It will be upgraded soon to KitKat, the newest iteration of Google’s software, designed for low-power smartphones that are popular in emerging markets.

On top of boosting sales in developing regions, the Moto G may help stoke demand in established markets among more budget-conscious consumers, such as college students, Woodside said.

There’s “a huge opportunity for creating that high-quality, high-value product,” Woodside said. “This is a global phone.”

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

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

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