Google’s Motorola subsidiary pinned its hopes for a great 2013 on the Moto X, a high-end smartphone that allows users to customize the outer shell. But with indications that the device isn’t selling as well as expected (Motorola revenues were down more than 33 percent in the most recent quarter), there’s a new strategy in the works: aim for the broadest, cheapest market possible.
Motorola’s flagship for this drive into the lower end of the market is the new Moto G, which will retail for $179 unsubsidized and boast some higher-end features, including a Qualcomm Snapdragon 1.2 GHz processor with 1GB of RAM and a guaranteed upgrade to Android 4.4 once the latter arrives early next year (until then, it will run Android 4.3). The screen measures 4.5 inches (1280 x 720 HD, 329 ppi), and purchasers can opt for either 8GB or 16GB of storage (with two years’ free 50GB storage on Google Drive).
“We believe half a billion people deserve better,” Motorola CEO Dennis Woodside told the audience during the Moto G unveiling event Nov. 11 (according to TechCrunch), referring to those mid-tier customers who won’t (or can’t) shell out the cash for a higher-end smartphone such as the iPhone 5S, and often end up paying for a cheap device with last-generation specs.
Google actually plans on making a profit on the Moto G, according to company executives talking to The Verge, but it remains unclear exactly how much. Certainly the low price-point and respectable hardware suggests razor-thin margins. But Google needs a phone that’s as cheap as possible in order to compete in the midrange market against not only rival Android manufacturers—many of which make their money off producing shoddy devices even cheaper than the Moto G—but also Nokia, which is attempting to reclaim its dominance in the segment.
One competitor that the Moto G doesn’t have to worry about (at least in terms of price) is Apple’s iPhone 5C, that company’s “midrange” offering that nonetheless retails for $550 unsubsidized, which puts it out of the range of bargain shoppers. (Not that Apple CEO Tim Cook seems to care: “We’re not in the junk business,” he recently told Bloomberg BusinessWeek.)
But Google and Motorola should be concerned about all those cheap Android devices already on the market—Google, because it can’t afford to alienate the manufacturers who made its software a worldwide hit by displaying obvious favoritism towards the Moto G, and Motorola, because it will need to make its newest creation a success despite an extremely crowded marketplace.