In order to gain traction in the hardware market,
) Motorola Mobility introduced its new smartphone, Moto X, which
is expected to be released in the U.S. by the end of this month.
Following the news, Google's share price surged 1.86%.
Moto X is the first smartphone designed by Motorola since it
was acquired by Google. Powered by its Android OS, Moto X will
come with a 4.7 inch display, better screen resolution, a camera
designed for a quick boot-up and a better battery life.
Features in the Moto X include design customization options
whereby users can personalize their handset with their choice of
colors and materials. It also has a Touchless Control feature,
which uses Google Voice to add voice-recognition capabilities and
turns on the phone even without touching.
The phone will cost $199 with a two-year contract and be
available on all four major U.S. carriers and US Cellular.
Google had bought Motorola for $12.5 billion in 2012 and
stated that it would continue to run as a separate unit, with its
phones based on the Android OS. The deal was the biggest in its
13-year history and propped up Google's portfolio with more than
17,000 patents. To Google's misfortune, Motorola has been
continuously losing market share to its competitors and has been
unable to regain it.
In the last couple of years, the once-significant cell phone
maker, Motorola Mobility, fell behind in the competitive
smartphone market, which is now dominated by
) iPhone and Samsung's Galaxy range, which runs on Google's
According to a report by research firm IDC, Android and
Apple's iOS operating systems together held approximately 92.3%
of smartphone market share in the first quarter of 2013.
Moreover, Apple and Samsung together hold a 62.2% share of the
U.S. smartphone market, while Motorola has a mere 7.8%, which was
down 7.1% from the prior quarter.
As a result, it becomes important for Motorola to introduce
competitive products that can address the needs of its target
market. We believe that the Moto X features position the phone at
the lower end and expect Google to come up with better versions
as time goes by.. At any rate, Motorola still has some way to go
to retain its lost glory.
Google is a market leader in online advertising and its mobile
strategy has been bang on target so far. Its Android OS has gone
a long way toward cementing its position in the mobile
However, the Motorola hardware segment has not done well. In
the last quarter, the segment was down 2.0% sequentially and
accounted for around 7% of revenues. Management did not say much
about Motorola's future plans.
Google currently carries a Zacks Rank #5 (Strong Sell). Stocks
that have been performing well in its sector and are worth
). While Earthlink carries a Zacks Rank #2 (Buy), Facebook
carries a Zacks Rank #1 (Strong Buy).
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