For a long time, Google’s $12.5bn acquisition of Motorola, the company that invented the mobile phone in 1973, was a bit of an enigma. Many thought the digital giant had overpaid and the takeover was a defensive play to protect it against the flurry of patent court cases that were happening worldwide.
While Motorola had a lacklustre Mobile World Congress, with a placeholder stand and practically no new handsets to show off, behind the scenes it was a different story. Operators and retailers were effusive about the quality of forthcoming devices. But consumers had some months to wait before they were able to see what the new Motorola had in store.
The Moto X was shown off during the summer but it is a smartphone only available to the United States, for now. The Moto G, which was launched this month in Latin America by Motorola Mobility’s CEO Dennis Woodside, is a global product. His plan is simple. He said: ‘We are solving what we think is a very big problem for hundreds of millions of people. Most people in the world cannot afford a $500 or $600 smartphone.’
Eyebrows were raised at the bargain basement £135 price. Andrew Morley, UK general manager for Motorola, said the company will make money on every handset it sells. He said its software development costs are low because the handset runs stock Android. He said: ‘This is a global product with launches in Mexico, Brazil, Canada and the UK. With that comes economies of scale and all of those go into making the handset affordable. We are making it accessible to people who haven’t been able to buy this sort of phone at this price.’
Battle for the bottom
Motorola was explicit in arguing that manufacturers have been giving consumers a raw deal in their low-cost Android output thus far. The pricing of the Moto G suggests Motorola is keen to compete against the likes of Samsung, Nokia and Huawei in the value market. The launch in Latin America could be seen as an indication it is also targeting handsets running the Mozilla OS.
Morley said that cost was a big barrier for customers to upgrade to a modern device or for feature phone users to switch to smartphones. He said if you are a consumer on a budget, either you compromise by buying an old flagship, like the iPhone 4, or a cheaper and more modern Android handset with what he calls a poorer experience. He said: ‘The Moto G has broad appeal – this is the thing that struck me in going through the research. A friend of mine has a 12-month old Galaxy S III. It has a smaller screen and an older version of Android. It feels like the device is a compromise. For him, something with a low upfront cost is a great option. He can upgrade without having to break the bank.’
Does this mean Motorola is waving goodbye to flagship devices? Morley was coy, saying that a decision had not yet been made about bringing the ‘flagship’ Moto X to these shores. However, even the Moto X can be bought for around $620 upfront (£385) in the United States, much more affordable than the iPhone 5s, Samsung Galaxy S 4 or HTC One.
Bringing together the old and new
Motorola is one of many challenger brands trying to break the Apple/Samsung duopoly. Morley said the manufacturer’s campaign would be centred on digital, online and point of sale activity. He said the manufacturer was keen to avoid an ‘excessive’ campaign in order to keep the costs low.
This could be seen as a shrewd move after the contrasting campaign for the Moto X in the United States. Advertising for the Moto X was widespread but the blockbuster campaign did not follow through with sales. According to Strategy Analytics, only half a million handsets were sold in the United States by the end of September, a far cry from Apple bursting through the multimillion sales mark in the first few days its iPhones go on sale.
Morley did not comment on those figures but admitted Motorola has lost some brand strength in the years since his heyday. However, he said he believed the latent awareness of the Motorola brand among older consumers would tally with younger consumers’ knowledge of the Google brand. He said: ‘We have a level of latent awareness. We have been a market leader, although I would admit that we are not as relevant for the younger market. What is relevant is the Google association. It makes a huge difference to brand perception. This makes Motorola a very powerful brand in the UK.’