Google's Moto X Is a Sign of the Times

On Thursday, Google's (NASDAQ: GOOGL  ) Motorola Mobility announced the Moto X, its latest offering and the first totally original smartphone from the company since it was acquired. While the new device will be capable, it is hardly the type of innovation that we hope for when a big new release is brought to market. The reality, however, is that the smartphone market in the U.S. has lost much of its magic, delivering a series of underwhelming product releases over the last several quarters; understanding this should be a precursor to any investment in the sector.

The Moto X
The new smartphone gives you a 4.7-inch display, 16 GB of memory, and a 10 megapixel camera. Noted Apple (NASDAQ: AAPL  ) analyst Gene Munster of Piper Jaffray commented that the Moto X was not significantly different enough from the Samsung Galaxy S4 or HTC One to draw iPhone users. He did note, however, that the voice command functionality was beyond that available on any other Android device -- the Moto X's audio sensors are always listening for user inputs.

The real draw of the Moto X is the ability it gives you customize the device. The smartphone will allow you to select from 18 colors for the back of the device, two for the front and seven accent colors. There is discussion that Motorola is pushing to offer a wood back, but the specific wood has not been chosen. The company is betting that consumers will be drawn to the Moto X's unique design, boasting over 2,000 different combinations.

File under "bad decision"?
Google's acquisition of Motorola for $12.5 billion dollars has yet to yield the kind of results that justify the price the search king paid. The company has been careful not to show favoritism toward the Motorola division, presumably in an effort not to alienate other Android partners that would like take second-class status poorly. Yet you must wonder if Google didn't plan to make Motorola devices the premier Android offering on the market, why spend the money at all?

Why should you care?
The real significance of the release of Moto X is that it represents the latest in a line of underwhelming product unveilings. When Apple rolled out the iPhone 5, many critics were left wondering where the Apple "wow" factor had gone. The phenomenon was repeated when Samsung brought the Galaxy S4 to market -- it was clearly an advance, but not the kind of game changer many of us wanted and had hoped for from Samsung. Perhaps the ultimate case of letdown has been the offering from BlackBerry. While many reviewers agree that the Z10 and Q10 are solid, competitive devices, BlackBerry is so far from the limelight that it seems clear there is no path back.

BGC Partners' Colin Gillis said that the Moto X is "chasing after the high end right when the high end is dead." This seems to be the case across the board for the top smartphone makers. Our expectations have gotten so high, that meeting them is impossible and top smartphones have become something of a commodity. Apple fans stay in the iOS ecosystem, while Android users pick among a handful of solid choices in that ecosystem. There is some defection between the two (and even to alternate options), but "gotta-have-it" smartphones are fading.

What this means for investors is that major swings around product releases are no longer as likely. The release of the iPhone 5 certainly drove strong sales figures for Apple, but the stock did not climb indefinitely because Apple made the top-selling smartphone. Similarly, Google got a pop when the Moto X was released, but Google shares have found their strength from other projects, in my opinion. Ultimately, there is still room for spectacular innovation, but until it hits the mark, you should not expect the wow factor.

Without this excitement to drive sales, it will be important -- as it always has been -- to watch the fundamentals. Metrics like product mix, profit margins, and total sales figures will continue to be instructive, but you should watch to see if shifting focus from consumers changes the landscape. If the "gotta-have-it" factor really is gone from the industry, all of these companies may have to find new ways to spark growth.

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  • Report this Comment On August 03, 2013, at 1:03 AM, peto3 wrote:

    Doug, thanks for giving us more of the same garbage "journalism" we've come to expect from the hack media on the subject of innovation. The truth is you have no clue what innovation is. If you did you'd let us know what a "game changer" smart phone might look like wouldn't you? Or better yet you'd go about creating it yourself. But instead you choose to write about what you're incapable of seeing or understanding which means you end up writing about nothing at all ...

  • Report this Comment On August 03, 2013, at 2:33 PM, rms4lb wrote:

    This article is full of mistakes. Please know the difference between things like "memory" and "storage space". This will establish some sort of credibility in your article. Please proof read your story as well. I would like to read more about this phone but this article doesn't deserve to be read.

    Thanks, Ryne

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