Google (NASDAQ:GOOG) finally rolled out its high-end Moto X smartphone and critics are giving the device two thumbs up. The phone will compete directly with Samsung's (OTC:SSNLF) Galaxy 4, Apple's (NASDAQ:AAPL) iPhone5, HTC's One, Nokia's (NYSE:NOK) Lumia 920 and up series, but less with Blackberry's (NASDAQ:BBRY) Z10.
Hardware aside, the Moto X is highly customizable. Besides the color of the phone itself, you can also choose a personal message in the back cover. In order to cater to the individual feature request of every customer, Google will be assembling the Moto X in Texas and shipping devices out in four days.
But with the high-end smartphone business becoming more crowded everyday, and with competition squeezing margins in the space, the question is, will Google's Moto X do anything to Google's bottom line? The answer is probably no.
Google is still restructuring Motorola. After laying off 20% of the company's workforce last year, it will lay off an additional 10% this year (if not more). Eventually Google will get it right (they usually do) and Motorola will at least stop bleeding. Besides, only Apple and Samsung are making any real money in this business.
But Google does not need to make money in this business at the moment. It does not depend on making money from selling smartphones. As such, it has the luxury of being able to compete in the space without shareholders becoming nervous about Motorola's loses.
And the fact that Google can, if it so chooses, use cutthroat competition tactics to gain market share is something that must have a lot of companies rethinking about their alliance with Google and the Android OS altogether. Sure Android is technically open-source, but may parts of the code are exclusive to Google and if it so chooses, it can make it almost impossible for anyone else to use it.
And now that the whole world is hooked on the Android OS, why wouldn't' Google want to be the major player in the space on the hardware side? Why would Google not want to displace Samsung as the lead smartphone maker of Android devices? I mean, why did it pay $12.5 billion for Motorola to begin with?
The Moto X is not aimed at Microsoft's (NASDAQ:MSFT) WP8 operating system or even Nokia itself. Sure as far as smartphones go, it's another device in the space and by default it will be another competitor. But WP8 and Nokia don't really have that big of a market share yet. And like everything else, there are many Microsoft fans out there that will always buy a Microsoft ecosystem device no matter what Google does. So the Moto X is not aimed at them.
Same for Blackberry. In the scheme of things, the Moto X will provide competition for Blackberry, but Blackberry also has its own crowd and most of them will continue to buy Blackberry devices, even if they are the last users on earth. Besides, Blackberry is in a league of its own, being (still to date) mainly an enterprise smartphone device. Google is not aiming at Blackberry's niche yet.
How about Apple? Sure Google would like to displace Apple to some extent, however Apple is not a threat to Google by any means. Google is a services company, Apple is a devices company and has a totally different ecosystem. Remember, it's Microsoft that is spending billions to try to compete with Google, not Apple.
As for all the cheap Chinese Android makers, Google is not after them either. For the time being at least, Google is not interested in making low end devices. Maybe in the future, but the Moto X is aimed at the high-end crowd.
Well the only one left is Samsung. Moto X is aimed at keeping Samsung in check. Moto X being the first smartphone device that Google is rolling out as the new owner of Motorola is a message to Samsung that Google will not permit it to become so large as to threaten Google's Android franchise.
Like I have said before, Samsung is already behaving as if Google is a foreign element to them. They only mention the name Google or Android when they absolutely have to. And if Google ever made it very difficult for them to use Android, they would be in a lot of trouble. And if Google ever gets the capacity to make tens of millions of devices a year, I don't see a reason for them not to.
Whether Moto X is as good or better than the Galaxy 4 is besides the point at the moment. Google will be taking market share from Samsung any way one slices it and dices it. The fact that the phones are assembled in the U.S. is enough to make many people in the U.S. at least switch.
And since Google is behind the Android OS itself, you better believe the Moto X will have features that will only be available on a Google Android device.
Will Google's strategy work? Yes, I think it will. In the end, people will definitely prefer a Google device, if the specifications are as good as other devices. And judging from Google innovative capacity, I think we can expect many surprises in the smartphone space going forward.
As for Samsung, if I were them, I would start spending a lot of the money I made selling Android devices all these years, paying developers to port apps to Tizen, and soon.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.