NEW YORK (
is looking to step up its presence in mobile devices later this year with the release of the Moto X, which will be the first smartphone manufactured by
to be assembled in the U.S. The offering is expected to create new challenges for
, as the device will be more aware of its surroundings and capable of anticipating which features its user is likely to run next, in addition to being priced more cheaply in an effort to pressure the high profit margins Apple products generate.
The phone (previously rumored to be called the X Phone) was announced at this week's D11 conference in California, and marks Google's entrance into the "hero" phone space with products meant to compete directly with flagship handsets such as
S4 and Apple's iPhone. So far, the Moto X is being sold on the idea that it will better anticipate the needs of its user, and allow for a higher level of interaction than the devices available now.
The new phone will include sensors (such as its accelerometer or gyroscope) which will run constantly and enable the phone to understand when it is being taken out of the pocket or travelling at high speeds. With this information, the phone will attempt to predict its next intended use and respond accordingly. If the phone expects its user to take a picture, for example, the camera app will be opened in advance.
Its pricing is expected to be well below that of the iPhone 5. Prices are declining steeply for most consumer electronics items, so it's not surprising to see Google and Motorola use these trends as a strategy for cutting into Apple's market share.
Early comments from Motorola have not named the iPhone, but "high-margin" products have been mentioned specifically. With products like the iPhone earning margins above 50%, a correction back toward market averages looks overdue.
At this stage, Google appears to be preparing itself for this correction and it seems the Moto X will not experience Apple's margin restraints. This puts it in a better position, as it is becoming more and more likely that the elevated margins in consumer electronics will fall.
Other aspects of Google's strategy can be seen in the announcement that the Moto X will be produced at a plant in Fort Worth, which was previously used to manufacture Nokia products. Apple has sought positive attention with recent decisions to bring a portion of its manufacturing jobs back to the U.S. But the number of jobs has not been specified, and Google has seized on this opportunity to make public its plan to hire 2,000 workers at the Fort Worth plant before August. While the phone's screens and processors will still be manufactured in Asia, roughly 70% of the product's assembly will occur in the U.S.
It's clear that the strategies driving the Moto X will present challenges for Apple on a number of fronts. Google is attempting to create a more intuitive user experience, to limit Apple's ability to command higher margins for its products and to pressure its competitors to put more focus on manufacturing domestically.
Whether the Moto X qualifies as the next iPhone Killer remains to be seen. But at this stage, it is clear that Google is looking to use a diversified approach in challenging the better-established players in the market for mobile devices.
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At the time of publication, the author had no position in any of the stocks mentioned.
Richard Cox is a university teacher in international trade and finance. His articles appear on a variety of Web sites, including
, FX Street and others. Investing strategies are based on technical and fundamental analysis of all the major asset classes (stock indices, currencies and commodities). Trade ideas are generally based on time horizons of one to six months.