The Last Chance for Motorola?
Three years after its takeover by Google, handset maker Motorola is finally unleashing an exciting new product in New York, the 1st of August. But will its new Moto X smartphone be too little too late?
The once white-hot smartphone market isn’t what it used to be. Growth is stalling. Margins are being slashed. The Moto X is entering an already saturated market and Motorola will be hard pressed to earn enough to justify Google’s $12.5 billion dollar investment.
Google has already clawed back several billion through asset sales, so the final bill is probably closer to $4 billion. For that money Google got full ownership of Motorola’s strategically important patents. But did Google pay too much?
If Google had waited longer the price of Motorola would probably have dropped. Competitors like Blackberry have plunged in value and there’s every reason to believe Motorola would have done the same. The patents Google was so keen to acquire haven’t exactly set the smartphone market on fire.
If Google had kept their cash they wouldn’t now be in the awkward situation of competing with themselves. As well as their Motorola product line, Google now makes hardware like Nexus Android phones and Chromebooks, so it’s hard to see why Google needs Motorola at all.
In fact Motorola may be more of a burden than an asset. Google has been using valuable managerial time making large numbers of Motorola employees redundant and retraining the rest to bring them in line with Google’s corporate culture.
So it’s no exaggeration to say that Google and Motorola need the new Moto X to succeed. But with major American retailers like Walmart effectively discounting Apple’s iPhone 5, the Moto X will be a mid-range phone competing on price against high-end competition.
When even Samsung is struggling, despite its enormous marketing budget and excellent Galaxy S4 phone, and when HTC, Nokia, Sony and others are battling for market share, Google’s Motorola faces enormous challenges. Their new Moto X needs to be ground breaking, great value and nothing short of brilliant if it’s to survive in the saturated smartphone market. Good luck with that.
Source: Business Insider