The Real Meaning of Moto X

NEW YORK (TheStreet) -- Google's (GOOG) Motorola is set to launch the long-awaited Moto Xsmartphone on August 1. The major question that arises is: How canthis device differentiate itself in the market?

There have been more leaks around the Moto X than I can count. Someof them may be true; others not. Other things have not been addressedin the leaks. Let's deal with each of the possibilities:

1. Hardware: How to out-engineer Samsung?

The Android smartphone market is flooded with devices from dozens ofcompanies. The market is so competitive that nobody except Samsungmakes any money in the Android world. One really has to ask if themarket needs Motorola as the umpteenth Android.

If the leaks are true, the Moto X looks to be no match for several ofthe leading entries in the Android market today, including Samsung:720p screen, 4.5-4.7 inches, no cutting-edge CPU. I mean, seriously?These are the Samsung Galaxy S3 specs from May 2012, which is ancienthistory in the smartphone world.

2. Customization: Jewelry, gimmick, hip or just irrelevant?

It is widely believed that Motorola will use the domestic U.S.manufacturing situation to its advantage by offering some degree ofdevice customization. This includes a choice of colors and perhapsengraving.

For the life of me, I don't see why this is significant. Why would Ipossibly care what color my phone is as long as it doesn't look weirdor objectionable? This seems like a solution in search of a problem.

3. Software: Lots of possibilities, but hard to get right.

There is no doubt that there are multiple ways to improve the AndroidOS. My two favorites would be to plug the two aspects that keeps mefrom getting rid of Apple ( AAPL) iOS in my stable of devices: Podcasts andAirPlay (wireless display to TV).

Currently, Android's offerings in terms of podcasts andAirPlay-equivalent are somewhere between nonexistent and deeplyinferior to how Apple does them. If Android plugs these two holes, Iwill be ready to ditch my iOS devices in favor of 100% Google.

The problem with this theory is that almost every Android softwareimprovement of which I can think -- including podcasts and AirPlay --really should be part of the standard Android offering, not some sortof third-party application exclusive to Motorola.

Instead of these important improvements, the leaks around the Moto Xsoftware have pointed to various sensors and behaviors. For example,the Moto X is supposed to be able to tell if I'm driving.

But why? We don't know yet, but I suspect that there is some sort ofBig Brother ambition here. If Moto X thinks I'm driving, it willdisable all sorts of functionality on my smartphone, supposedly.

Yeah, I need that as much as I need a bar without alcohol. I don'twant the Moto X to be able to tell if I'm driving in the first place,let alone sabotage any functionality as a result. If this is true,the only person who will voluntarily buy the Moto X is New York Mayor Mike Bloomberg.

Besides, what if I'm just a passenger -- whether in the car or on abus? How would it know? Could I disable Big Brother?

Another feature straight from Mayor Bloomberg's mansion -- or the NSA,for that matter -- is the idea that Moto X will constantly listen,regardless of whether the phone is turned on or not. The concept hereis that you'll simply be able to tell it some voice command, and itwill recognize your voice and execute the order, without you needingto touch the phone.

You could just bark "Google, remind me to pick up a gallon of milk onthe way home from work" without touching or typing anything.

If this is true, the paranoia surrounding Google Glass privacyconcerns will seem like small potatoes. We really don't know exactlyhow this will work, but some will argue that by having the Moto X, youare essentially volunteering your room to be bugged at all times. Noway that the NSA or the IRS would ever issue a subpoena for thatinformation -- no way at all.

Certainly, Motorola would claim that nobody is storing thisinformation for long, and that the use is innocent and only there tohelp you. Good luck with that argument! If this is part of Moto X, Ipredict that it will be shunned by many people.

In other words, it's hard to get software right if you're Motorola.Your attempts is likely to drop into either of these three buckets:
  • Stuff that should be in the Android core OS, not added by Motorola.
  • Gimmicky stuff that people will ignore.
  • Spooky, cringe-worthy NSA sonars that would cause consumers to runfor the hills.

4. Price: The solution for everything.

Economics 101 tells us that no matter the shortcoming, every product,service and even the stock market itself will sell if the price is lowenough. Google is already selling the Nexus line of smartphones andtablets at prices lower than other equivalent devices.

The 8-gig version of the Nexus 4 sells for $299; the 16-gig version$349. That device was made available last November, and was missingLTE. It's now a mid-range device, lower than the Moto X would be iflaunched as rumored.

The $299/$349 prices for the Nexus 4 are the most favorable in themarket. Could the Moto X be priced similarly? Seeing that it's gothigher specs, how would it be explained if the price were to be evenlower, such as $249 or even $199? Everyone in the industry tells methat you just can't make a phone of that grade at that price.

If a phone of that caliber can be made for $299 or below -- let alone$199 -- profitably in Texas, we would instantly know why Rick Perry isleaving the governorship and focusing on running for president in 2016.It would mean that Texas is more competitive than China.

It is entirely possible that Motorola could sell this phone at a loss,courtesy of Google's willing to fund the shortfall. The motivationwould be some new avenue of monetizing this phone that's somehow nothappening on Androids sold by Samsung, LG, HTC, Sony ( SNE) and others. Ihave no idea what that would be precisely, but generally speakingGoogle is all about learning three things from you:
  • Where you are.
  • What you shop.
  • What you think.

If Moto X gives Google some sort of advantage in achieving thesegoals, it could be willing to fund an otherwise irrationally lowprice. The problem here is of course what this would do to the otherAndroid device makers, who surely would not appreciate competingagainst its operating systems supplier.

Conclusion: I don't see it.

Aside from being made in Ft.Worth, Texas, the Moto X approaches itslaunch date with all the market's anticipation of James Bond 007looking to get a new revolutionary gadget. Perhaps they will surpriseus all with something not just unusual, but also useful.

The problem is, after examining the hardware and softwareopportunities for Moto X, imagining such a useful advance in thesmartphone world is difficult. The only remaining avenue appears tobe price, which in and of itself is also a two-edged sword.

At the time of publication the author was long GOOG andAAPL.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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