In order to gain traction in the hardware market,
) Motorola Mobility handset unit plans to unveil a new
smartphone, Moto X, by October.
The details of the smartphone are not yet known but the new
phone will be built at a manufacturing site near Texas that will
employ approximately 2,000 people.
Google had bought Motorola for $12.5 billion in 2012 and
stated that Motorola 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, has fallen behind in the competitive
smartphone market, which is now dominated by
) iPhone and Samsung's Galaxy range, which runs on Google Inc.'s
Android platform. According to the report presented by research
firm IDC, Google's Android and Apple's iOS operating systems
together held approximately 92.3% of total market share in the
first quarter of 2013.
As a result, it becomes important for Motorola to introduce
competitive products that can address the needs of its target
market. We believe that handsets with new features, affordable
service plans and low pricing will likely garner significant
market traction, driving market penetration and revenue growth
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 segment.
But, the Motorola hardware segment has not been able to perform
well. In the last quarter, the segment was down 32.8%
sequentially and accounted for a little over 7% of revenues.
Management stated that it expects the business to remain choppy
in the near term.
We believe that Motorola still has a long way to go to regain
its lost glory since both Apple and Samsung together hold a 60.2%
share of the U.S. smartphone market, while Motorola has a share
of only 8.4%, down 11.6% from the prior quarter.
Google currently carries a Zacks Rank #3 (Hold). Other stocks
that have been performing well and are worth considering include
). While Yahoo carries a Zacks Rank #2 (Buy), Akamai carries a
Zacks Rank #1 (Strong Buy).
APPLE INC (AAPL): Free Stock Analysis Report
AKAMAI TECH (AKAM): Free Stock Analysis
GOOGLE INC-CL A (GOOG): Free Stock Analysis
YAHOO! INC (YHOO): Free Stock Analysis Report
To read this article on Zacks.com click here.