Moto X Launch Puts Google and Samsung Directly at Odds

New Motorola Smartphone to Further Strain Fractured Relationship

By Published on .

Motorola Mobility CEO Dennis Woodside announced Wednesday the company would release the Moto X this summer, its first smartphone developed under Google. The move is sure to escalate the ongoing tussle for smartphone and mobile operating system market share between Google, which bought Motorola in 2011, and Samsung.

Google's domination of the mobile ad business -- it will receive more than half of all U.S. mobile ad revenue this year, according to eMarketer -- is dependent upon Samsung's lion share of the U.S. smartphone market (45.9% in 2013 per eMarketer). Samsung is similarly dependent upon Google's Android mobile operating system to power its phones.

Dennis Woodside
Dennis Woodside

Despite that mutually beneficial relationship, the two companies have been making a series of moves to prepare for a break in their partnership. Late last year, Google poached Samsung marketer Brian Wallace to head up marketing for Motorola Mobility. Samsung, for its part, teamed up with Intel, Sprint and Huawei, among others, in September 2011 to develop an open-source mobile operating system called Tizen.

But with Moto X, Google is officially announcing that it will directly compete with its most valuable business partner. Motorola has several other phones in development as well.

Motorola will not be given exclusive access to Android, Mr. Woodside said at the at the AllThingsD conference on Wednesday, but he added Android boss Sunday Pichai has already seen the device.

A Google spokesman declined to comment about what the new phone means for its relationship with Samsung, but pointed to remarks made by Mr. Pichai at the AllThingsD conference Thursday: "From an Android standpoint we're excited about them [Moto X], but no differently than we are about Samsung."

On Wednesday, Mr. Woodside discussed Motorola's arms-length relationship with Google/Android. For example, Google employees give up their jobs to join Motorola, and even have a different entry badge. He was adamant that Motorola will be treated by Google and Android no differently than Samsung or any other device maker.

Samsung did not immediately respond to a request for comment.

Motorola's share of smartphone sales dropped from 8% in the fourth quarter of 2011 to 7% in the fourth quarter of 2012, according to the NPD group.

The Moto X will be able to sense when a user is driving or has taken the phone out of his or her pocket and react accordingly. If Moto X senses a user is driving, for instance, it will behave differently so as not to interfere.

Mr. Woodside teased the crowd, saying he had a Moto X in his pocket, but that he couldn't show it to them (or anyone). This is the coy marketing approach Google has taken since it first bought Motorola and insisted that the acquisition was merely to give Google leverage in patent litigation. While surely a benefit, that was not the entire motivation. Google is a mobile device manufacturer now, and it will start competing with Apple, BlackBerry, HTC and Samsung in that market this fall.

An "Assembled in the USA" tagline seems to be part of the Moto X's initial marketing strategy, which would put it in opposition to Korea-based Samsung. A Motorola spokesman did not immediately respond to a request for comment on this issue. Mr. Woodside said 70% of the phone will be assembled in Fort Worth, Texas, which qualifies it for the "assembled domestically" designation.

Most Popular