Engineers at Motorola MSI -0.53% are hard at work on a sophisticated
handset—known internally as the "X phone"—but the Google Inc. GOOG
-0.93% unit is running into some obstacles in its effort to provide more
potent competition for Apple Inc., AAPL -0.46% said people familiar
with the matter.
Seven months after being acquired by Google for $12.5 billion, Motorola is designing its marquee handset with cutting-edge features to stand apart from existing phones when it is released next year, these people said.
But while Google is known for swift execution on the Web, its new hardware unit has run into hurdles associated with manufacturing and supply-chain management that have caused the company to rethink some initial plans for the X phone, such as using a bendable screen, these people added.
The previously undisclosed development effort is a key facet of Google's strategy for boosting the minuscule market position of the cellphone pioneer, based partly on bolstering quality while reducing the quantity of Motorola products.
Motorola is primarily working on two fronts: devices that will be sold by carrier partner Verizon Wireless, such as the "Droid" line of smartphones, and the X phone, these people said. Motorola is also expected to work on an "X" tablet after the phone, the people added.
Meanwhile, Google must manage complex relationships with smartphone makers that use its Android mobile-device software—particularly with Samsung Electronics Co., 005930.SE -4.06% a Motorola rival that has become the No. 1 smartphone maker with Google's help.
Dennis Woodside, a former Google top sales executive who is now Motorola's chief executive, declined to discuss products under development. But he said in an interview that the company is "investing in a team and a technology that will do something quite different than the current approaches."
He said while Motorola has "fallen under hard times," it "now has the support of a shareholder in Google that has resources to do big things." He added that only one billion of the world's seven billion people use smartphones, calling that "an incredible opportunity."
For the X phone, an initiative being led by former Google product manager Lior Ron who worked on the Google Maps team, Motorola wanted top-notch features for the phone's camera and photo software, such as better color saturation and the ability to take panoramic shots, two people familiar with the situation said.
But some of the features were found to drain battery life or already have been incorporated into popular new devices, such as the iPhone 5 that launched earlier this year, they added.
Motorola also ran into difficulties when it looked into using a bendable screen and materials such as ceramics that would allow the company to make the X Phone more stress resistant, use more colors and mold into different shapes, these people said.
One person familiar with the plans said Motorola plans to enhance the X Phone with its recent acquisition of Viewdle, an imaging and gesture-recognition software developer. This person said obstacles are a "normal" part of the research-and-development process. Despite the challenges, the new handset is due out sometime next year.
Motorola, which accounted for less than 3% of Android phone shipments in the third quarter, according to market research firm IDC, has moved to improve its deteriorating financial position.
Google has cut 4,000 Motorola workers, or 20% of its staff. This week, Motorola agreed to sell its TV set-top box division to cable equipment maker Arris Group Inc. ARRS +1.79% in a deal valued at about $2.35 billion.
Google's purchase of Motorola was a controversial move, partly aimed at acquiring patents to use against rivals that might sue the Internet company. The company has since talked up the benefits of making its own devices, even though Motorola's market share had dwindled.
The deal complicates Google's mission to advance Android. Hardware makers typically install a version of the operating system that comes attached with Google's revenue-generating services such as Google Search, Google Maps and Chrome browser.
Samsung, with its popular "Galaxy" devices, is the biggest such partner and is quickly gaining market share. The South Korean company shipped 40.3% of all Android-based phones in the third quarter, according to IDC. Google has co-developed devices with Samsung and provided it early access to new versions of Android software.
Some Google executives have expressed fears the relationship could go sour if Samsung decided to use a "forked" version of Android, according to four people familiar with the matter. That means Samsung would create devices based on a version of Android that doesn't come with Google apps preinstalled.
Motorola is seen as a kind of insurance policy if Samsung shifts strategy, these people said, even though there is little evidence so far of such a move. Google could begin adopting an integrated approach of having its Motorola and Android units work more closely together, like Apple does with its hardware and software teams, they said.
A Samsung spokesman declined to comment.
Motorola's Mr. Woodside said "I don't necessarily agree" that his unit is a hedge in case Google-Samsung relations go south. He added that Motorola is "operating independently" from Google because it wants to "preserve the success of Android."
Google Chief Executive Larry Page has told the Motorola team to "think big" and aspire to reach the scale of Samsung's mobile business, and promised a significant marketing budget for the unit, said people familiar with the matter.
But Mr. Page so far hasn't pushed Google's Android unit to aid Motorola by giving it early access to the most updated versions of Android software, as it has with Samsung, in order to avoid the appearance that Motorola is receiving preferential treatment, these people said.
Google has filled Motorola's top ranks with several dozen Google executives and product managers, many of whom didn't have previous experience with hardware, said people familiar with the matter. Google sees that relative inexperience as an advantage if it wants to revolutionize smartphone design, these people said.
The company says it will stop making devices for dozens of countries in order to focus on the biggest markets. Mobile-industry experts said that will have the effect of reducing Motorola's scale—and thus its leverage when negotiating over price with suppliers.
Motorola's Mr. Woodside said "scale is important but building great products is even more important."
Pieter Knook, a former executive at wireless carrier Vodafone Group VOD.LN -0.13% PLC, said, "If you look at the handset makers other than Apple, it's a pretty grim story for anybody who's not Samsung" or Chinese companies building lower-priced smartphones.
http://online.wsj.com
Seven months after being acquired by Google for $12.5 billion, Motorola is designing its marquee handset with cutting-edge features to stand apart from existing phones when it is released next year, these people said.
But while Google is known for swift execution on the Web, its new hardware unit has run into hurdles associated with manufacturing and supply-chain management that have caused the company to rethink some initial plans for the X phone, such as using a bendable screen, these people added.
The previously undisclosed development effort is a key facet of Google's strategy for boosting the minuscule market position of the cellphone pioneer, based partly on bolstering quality while reducing the quantity of Motorola products.
Motorola is primarily working on two fronts: devices that will be sold by carrier partner Verizon Wireless, such as the "Droid" line of smartphones, and the X phone, these people said. Motorola is also expected to work on an "X" tablet after the phone, the people added.
Meanwhile, Google must manage complex relationships with smartphone makers that use its Android mobile-device software—particularly with Samsung Electronics Co., 005930.SE -4.06% a Motorola rival that has become the No. 1 smartphone maker with Google's help.
Dennis Woodside, a former Google top sales executive who is now Motorola's chief executive, declined to discuss products under development. But he said in an interview that the company is "investing in a team and a technology that will do something quite different than the current approaches."
He said while Motorola has "fallen under hard times," it "now has the support of a shareholder in Google that has resources to do big things." He added that only one billion of the world's seven billion people use smartphones, calling that "an incredible opportunity."
For the X phone, an initiative being led by former Google product manager Lior Ron who worked on the Google Maps team, Motorola wanted top-notch features for the phone's camera and photo software, such as better color saturation and the ability to take panoramic shots, two people familiar with the situation said.
But some of the features were found to drain battery life or already have been incorporated into popular new devices, such as the iPhone 5 that launched earlier this year, they added.
Motorola also ran into difficulties when it looked into using a bendable screen and materials such as ceramics that would allow the company to make the X Phone more stress resistant, use more colors and mold into different shapes, these people said.
One person familiar with the plans said Motorola plans to enhance the X Phone with its recent acquisition of Viewdle, an imaging and gesture-recognition software developer. This person said obstacles are a "normal" part of the research-and-development process. Despite the challenges, the new handset is due out sometime next year.
Motorola, which accounted for less than 3% of Android phone shipments in the third quarter, according to market research firm IDC, has moved to improve its deteriorating financial position.
Google has cut 4,000 Motorola workers, or 20% of its staff. This week, Motorola agreed to sell its TV set-top box division to cable equipment maker Arris Group Inc. ARRS +1.79% in a deal valued at about $2.35 billion.
Google's purchase of Motorola was a controversial move, partly aimed at acquiring patents to use against rivals that might sue the Internet company. The company has since talked up the benefits of making its own devices, even though Motorola's market share had dwindled.
The deal complicates Google's mission to advance Android. Hardware makers typically install a version of the operating system that comes attached with Google's revenue-generating services such as Google Search, Google Maps and Chrome browser.
Samsung, with its popular "Galaxy" devices, is the biggest such partner and is quickly gaining market share. The South Korean company shipped 40.3% of all Android-based phones in the third quarter, according to IDC. Google has co-developed devices with Samsung and provided it early access to new versions of Android software.
Some Google executives have expressed fears the relationship could go sour if Samsung decided to use a "forked" version of Android, according to four people familiar with the matter. That means Samsung would create devices based on a version of Android that doesn't come with Google apps preinstalled.
Motorola is seen as a kind of insurance policy if Samsung shifts strategy, these people said, even though there is little evidence so far of such a move. Google could begin adopting an integrated approach of having its Motorola and Android units work more closely together, like Apple does with its hardware and software teams, they said.
A Samsung spokesman declined to comment.
Motorola's Mr. Woodside said "I don't necessarily agree" that his unit is a hedge in case Google-Samsung relations go south. He added that Motorola is "operating independently" from Google because it wants to "preserve the success of Android."
Google Chief Executive Larry Page has told the Motorola team to "think big" and aspire to reach the scale of Samsung's mobile business, and promised a significant marketing budget for the unit, said people familiar with the matter.
But Mr. Page so far hasn't pushed Google's Android unit to aid Motorola by giving it early access to the most updated versions of Android software, as it has with Samsung, in order to avoid the appearance that Motorola is receiving preferential treatment, these people said.
Google has filled Motorola's top ranks with several dozen Google executives and product managers, many of whom didn't have previous experience with hardware, said people familiar with the matter. Google sees that relative inexperience as an advantage if it wants to revolutionize smartphone design, these people said.
The company says it will stop making devices for dozens of countries in order to focus on the biggest markets. Mobile-industry experts said that will have the effect of reducing Motorola's scale—and thus its leverage when negotiating over price with suppliers.
Motorola's Mr. Woodside said "scale is important but building great products is even more important."
Pieter Knook, a former executive at wireless carrier Vodafone Group VOD.LN -0.13% PLC, said, "If you look at the handset makers other than Apple, it's a pretty grim story for anybody who's not Samsung" or Chinese companies building lower-priced smartphones.
http://online.wsj.com
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