Imagine that a year after Apple released the $700 iPhone 5s with Touch ID, and all the implications of that highly marketable technology, Tim Cook announced a $200 smartphone, perhaps the iPhone 6A, with the same fundamental desire to push that innovation to millions of people that can’t afford a high-end device. What would happen to the perception of Touch ID? What would happen to Apple’s reputation if it sold hundreds of millions of $200 smartphones that featured a taste of the high end?
That is the question Motorola is posing with the introduction of its new LTE-powered Moto E, and the acknowledgement that its high-end Moto X products are but vessels for the engineering and future commoditization of core technologies.
I spoke to Motorola Mobility’s President, Rick Osterloh, as his company begins a new chapter in its life, both as an independent subsidiary of Lenovo — a company inexorably damaged by the commoditization and subsequent poisoning of the OEM PC space — and a progenitor primarily of low cost, high volume smartphones.
The new Moto E is a unique product, borne from the technological innovations of two generations of Moto X’s, often considered the best Android smartphone on the market. “The biggest opportunity in mobile is going to be in the very aggressive price points with great smartphones,” he told me. The numbers seem to support him.
When Motorola emerged in summer 2013 as the only Android OEM willing to build atop stock Android a deliberate handful of truly impressive features, it made into a feature something that most companies were only too happy to cover up: an unblemished Android experience.
But while the Moto X was a critical success, it lacked the hardware power, name brand recognition and marketing muscle of Samsung. It was a quietly capable device that excelled at everything, but called loudly to only a few.
The Moto G, on the other hand, an unassuming, low-cost handset that retained the visual simplicity of the Moto X but eschewed most of the software bolt-ons, quickly became Motorola’s fastest-selling handset ever, and proved that demand was high for a good, cheap smartphone.
Motorola also proved that a lot of engineering goes into making such a product, from choosing what to emphasize and what to omit. The original Moto G lacked LTE and expandable storage, and its camera underwhelmed for the price. Later variants, including the recently-released second-generation model, filled in those blanks, but the message was clear: the Moto G was a no-fuss, bloat-free smartphone for customers looking for value.
“We think that the Moto G is for people who want better value for money, but already own a smartphone. The Moto E is aimed at first-time smartphone buyers. Being very aggressive in both of these tiers is very important.
“[But some of our users may choose to buy an E over a G, and that’s fine.”
The importance of the Moto E becomes clear when one considers what it offers first-time smartphone buyers. Yes, it has the all-important stock Android 5.0 experience that critics love, but consumers just want a smartphone that has Facebook and Snapchat, a good camera and plenty of battery. Osterloh sees an opportunity to brand Motorola, however, more aggressively than it does with the Moto G, which stands in as whatever its customers want. There is little Motorola personality anywhere in the software, a boon to enthusiasts but a death knell to a company trying to rebuild itself.
To that end, the Moto X, instead of being seen as a failed flagship, has to be looked at through the lens of the new Moto E. “We need Moto X as a vehicle to introduce a number of interesting observations, and we use it for that purpose. But it serves that purpose because we want these innovations to go into our lower-cost products as soon as they can,” Osterloh remarked.
“That’s a different mentality to anyone else in our industry. Both for those that won’t introduce products as low price points, or who make them substantially compromised in capability.” To Moto, the X is an annual technology demo, albeit one that is carriers an enormous marketing investment.
“[And] we don’t see that as an issue; we actually see it as a strategy, to have a higher priced product that allows us to really push the envelope on technology, and to use those innovations to make experiences better for our lower-priced products.”
It makes sense, then, that the Moto X lacks in certain areas like the camera and battery life. Sure, Motorola would like the Moto X to make them money — which company will admit to ambivalence in that regard? — but it creates the Moto X as a platform for experimentation, to nail down the core features of an ecosystem that is now beginning to bear fruit, and revenue.
It’s also possible Osterloh is merely covering up for the Moto X’s poor sales performance, changing the messaging to suit his company’s current position as a low-cost leader.
In the three years that Google owned Motorola, it never once said how many phones it sold. Instead, it admitted quarter after quarter that the company lost money. As Lenovo takes the helm, things are becoming a bit clearer: Motorola sold just over 10 million smartphones last quarter, a number that betrays the struggle of starting from scratch. We can infer from comments from Motorola executives that most of those phones were the Moto G, the company’s blank slate, its Toyota Camry. But in order to bump the visibility of its low-cost brand, Motorola is taking tech from its Lexus equivalent, skipping over the Camry completely.
Shaky comparisons aside, Motorola appears to have found its virtuous cycle. “The most innovation [you’ll see] from us is going to be around driving great experiences lower and lower in price points, experiences you used to have to pay $600 to $700 for. And that’s what Moto E is all about for us.”