Moto G : Motorola's Emerging Markets Play With Google At Heart

After almost a couple of years of efforts to revive the once popular “Razr” brand again (but  in the smartphone space) with limited success, Motorola the device company, was on the verge of a complete overhaul to survive in this cut-throat smartphone market. And all commenced with the launch of new colorful and customizable Moto X this summer infused with rejuvenated marketing, attitude and portfolio. What we saw with Moto X was Motorola trying to differentiate by focusing more on user experience finding  solutions to various pain points maybe by offering more options to customize the phone to nuances like touchless gesture control leveraging its hardware expertise while growing further on embedded software engineering curve. I have been testing Moto X for couple of months now and pretty satisfied with the usability, features and buttery experience on the device.

The new flagship device hardly left the US shores and also didn’t make any dents in the competition but we believe Moto X is a step in good direction to see a “revived” Motorola. Our Monthly Market Pulse service estimates Moto X sell-out was roughly less than 500k units till end of October since launch in late August 2013. If Motorola can increase its reach in coming months with aggressive holiday season pricing and some marketing dollars influx (maybe from Google) could capture share away from likes of LG, HTC, Huawei, etc. But is this enough to become (again) a global company once Mototola was? No, and we think Motorola also understands that.

Moto Portfolio X & G

Realizing this, Motorola yesterday announced the new smartphone,  Moto G,  broadening the “Moto” portfolio positioning it for the prepaid emerging markets,. The superphone in terms of hardware specifications sports a 1.2 GHz Qualcomm Snapdragon 400, 1GB of RAM, 3G radios and a bigger 4.5 inch 720p HD display all starting at an exceptional unsubsidized unlocked retail price of US$179. Moving down the price-bands should help Motorola expand reach in emerging markets.

Moto G is “the killer” semi-premium type device which industry was hoping Apple would launch in terms of “iPhone 5C or iPhone Mini” to disrupt the emerging markets but Motorola (now a Google company) has taken the first plunge. We believe, Motorola is slowly moving towards a narrower portfolio (like iPhone) to maintain scale, unified design and offerings unlike its earlier broader portfolio of SKUs.

This (extremely low) pricing strategy for a high-price band specced device depicts that Motorola is no longer a device manufacturer at heart and its parent Google has started to heavily influence the overall Motorola’s strategy. In addition to the ‘Nexus’ line, Google now thus has ‘Moto‘ portfolio in its arsenal to get maximum higher specced device in hands of emerging markets consumers at lower price-points and multiply its (directly controlled) installed base. Motorola’s core business model and strategy has now started to align closely with that of Google’s, its all about reach, Google experience and eyeballs.  

However, to succeed in emerging markets such as Latin America, India and others distribution reach is the key in addition to a good brand, product and marketing muscle. Over the last few years, Motorola has done exactly opposite i.e. shrunk its global reach compared to what it enjoyed during the Razr mania times. Motorola will have to work actively smart and lean to expand its reach to gets it disruptively priced (but low profit) Moto G into the hands of consumers & maintain healthy balance sheet. Google’s ($$) contribution will be of utmost importance as the Motorola’s operating losses have continued to widen over the last few quarters.

It remains to be seen whether operators in prepaid markets of Europe warm to Moto G which could be a killer device to help them increase smartphone subscribers and hence data ARPU. However, there is a big question mark on Motorola’s China strategy as the vendor’s market share in the world’s largest smartphone market has hit an all-time low according to our latest Market Monitor Q3 2013 report. In Latin America, though Motorola should be able to compete well against Samsung, LG and Alcatel-TCL with $179 price tag and comparatively stronger brand equity.

In summary, Motorola moves ahead expanding  “Moto” portfolio across price-bands and geographies but with a renewed goal & strategy closely aligned to that of Google’s. Finally, Motorola is now a Google company.

Neil is a sought-after frequently-quoted Industry Analyst with a wide spectrum of rich multifunctional experience. He is a knowledgeable, adept, and accomplished strategist. In the last 18 years he has offered expert strategic advice that has been highly regarded across different industries especially in telecom. Prior to Counterpoint, Neil worked at Strategy Analytics as a Senior Analyst (Telecom). Neil also had an opportunity to work with Philips Electronics in multiple roles. He is also an IEEE Certified Wireless Professional with a Master of Science (Telecommunications & Business) from the University of Maryland, College Park, USA.

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