Two weeks ago, I was sorely tempted to add shares of Motorola Mobility (NYSE: MMI) to my winning tech portfolio. Today, I'm contemplating shorting the stock. What's changed? Xoom.
Tech blog Engadget reports that Best Buy (NYSE: BBY) will begin selling Moto's Xoom tablets on Feb. 17. They'll be powered by Google's (Nasdaq: GOOG) Honeycomb operating system, sport 32GB of data storage, and include connectivity to Verizon's (NYSE: VZ) 3G network. Moto's asking price for all this is apparently $700, or about in line with a comparably equipped iPad.
I've got three words for this: Worst. Idea. Ever.
Moto is following when it could be leading. Why not price the 3G Xoom as if it offers a better deal than its iPeer -- $599, perhaps? Cheaper pricing would spur demand and separate this Xoom from the 4G version that's coming in just a few months. The one that's most likely to compete with iPad 2.
Moto is missing an opportunity to make the Xoom's launch memorable, when that's exactly what the company needs. It won't be long before Honeycomb tablets from ASUS, LG, Samsung, and Toshiba crowd the market.
Right now, the iPad is the top dog and first mover in the market for smart tablets. Tens of millions have already been sold, and a new version of the device is forthcoming. Evicting it from the catbird seat won't be easy under the best of circumstances. From what we're hearing today, Motorola's moves aren't likely to change that.
But that's just my take. Now it's your turn to weigh in. Could Motorola get away with pricing the Xoom at a premium to the iPad? Please vote in the poll below, then leave a comment to explain your thinking.
