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What Will Be Google's Android Strategy for Motorola?

Stocks in this article: GOOG

NEW YORK ( TheStreet) -- What kind of smartphones and tablets could Motorola's Mobility division build for Google's (GOOG) Android strategy going forward?

First, let me make two assumptions so that we are all on the same page:

1. Google will soon divest a variety of Motorola business units, including the TV set-top boxes.

2. Google will keep the smartphone/tablet business, and perhaps some related items.

With that out of the way, let's discuss Google's constraints and options with respect to how it can plan an Android product portfolio for smartphones, tables and related devices.

The first issue is the most difficult one, and indeed the most painful one to ask and answer, and that is: What are Motorola's capabilities anymore?

Consider this: In the last six months, Google's other hardware partners have accomplished this:

  • Asus made a Nexus 7 tablet starting at $199
  • Samsung made a Nexus 10 tablet starting at $399
  • LG made a Nexus 4 phone starting at $299
  • Acer made a Chromebook (laptop) starting at $199

    It is hardly controversial to say all of these are better and more cost-effective devices than anything Motorola has produced.

    Even if Motorola had not been distracted by the pending (August 2011 to May 2012) merger with Google, could it have profitably engineered and manufactured any of these four devices at these kinds of prices?

    This type of capability breaks down into several dimensions:

    1. Timing: How quickly can Motorola cough up a new design and deliver the finished product?

    2. Quality: Can the fit and finish compete with Acer, Asus, Samsung, et al.?

    3. Cost: Can Motorola accomplish any of this at a competitive price?

    Obviously these three things hang together, to some extent. You can always have at least one out of these three. However, even two out of three is not good enough -- this is the big boys' game now, so you cannot tolerate falling behind on a single metric.

    All of these prices for the newest Google gear listed above has been class-leading, and widely lauded. It also appears that most of this work has happened in Asia. Yes, it's true that I'm not saying that all or most of the work needs to happen in Asia, but there is one thing here that is a bit suspicious to me, and that's Chicago.

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