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What kind of crazy scheme is Motorola hatching?

Mike Elgan | July 8, 2013
Motorola and Google say in a new ad their upcoming Moto X phone will be designed by users. Here's what I think they're planning.

Some of this de-commoditization cuts Google right out of the deal. For example, Amazon uses Android as the operating system on its tablets, which direct people not to Google's app store, downloadable movies and music and books, but to Amazon's.

Others, such as the leading phone maker, Samsung, essentially treat Google stuff as the commodity and Samsung hardware and software as the non-commodity. Samsung is even driving the development of an alternative to Android, called Tizen.

Tizen is just one brand-new Linux-based Android alternative to come out on the market this year. And with each new alternative, Android becomes more of a commodity.

This is a problem from Google's point of view both as an idealist company and also as a business.

Google believes the best thing about a smartphone and the best experience with a smartphone is the use of Google Now, Search, Translate — the whole long list of Google services working together in a mobile device.

Many of their customers agree. But that vision isn't shared by the companies who make the hardware. Why should they bang out zero-margin handsets so Google can keep getting most of the mobile advertising revenue?

So let me put this in the starkest possible terms. Google relies on other companies to realize its vision for mobile computing. But those other companies have a strong financial incentive to reduce or eliminate Google's visibility and importance on the devices they sell. They do this by de-commoditizing their stuff and commoditizing Google's.

Enter Moto X
I believe Moto X will attempt to commoditize smartphone hardware. It will do this via its design-your-own-phone feature.

Google will no doubt sell its phone online. When you buy one, you'll probably be able to accept a standard phone. Or, you'll be able to choose a variety of customization options — different color, more storage or other options. The bare-bones version will be very inexpensive. Additional features will cost more.

Samsung's strategy is to give you any kind of phone you want. You want a cheap phone? Samsung's got a dozen of them. You want a powerful one, big one, a phone with a stylus? Samsung's got them all. And they're not commodities either, but heavily branded with names like Galaxy S4, Galaxy Mega and Galaxy Note.

The Google version of that is to reduce the importance of differentiating features by making them easy options.

The design-your-own approach finds a space between Apple's and Samsung's approaches.

The good thing about Samsung's model is that they've got something for everybody. The bad thing is that all those options give people what economists call "choice paralysis" (I can't decide!) and "buyer's remorse" ("maybe I should have bought the other one!").

 

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