Motorola, Google’s (NASDAQ: GOOG) smartphone arm, announced last Wednesday that it will release a trio of Razr smartphones. This is the first release by Motorola since it was acquired by Google. The release of the new phones wasn’t a big surprise as Google had previously stated that it would focus on smartphones with the Motorola segment. The smallest phone that the company released during this announcement was the Droid Razr M, retailing online for $99, at a price point which is likely to target first time smartphone buyers switching from low-end feature phones. The company did not disclose release dates for its two other smartphones, the Droid Razr HD and Droid Razr Maxx, but stated that they will be released before the upcoming holiday season.  Google competes with Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) for smartphone market share.
New phones to have Chrome as primary browser
We expected Google to pile on a lot of new features to its first releases, but things were relatively muted on this front. The company did announce that it is making Chrome the browser on the new phones as its desktop success has yet to translate to mobile devices. Since Google has approximately 95% market share on PC searches from the Chrome browser, an increase in the use of Chrome as the mobile browser of choice can help it maintain its mobile search market share. Overall, we think that gaining mobile browser market share can be as important as gaining PC browser market share as the mobile search ads division is estimated to be a greater part of Google’s value.
Additionally, we think adding the Chrome browser on Motorola smartphones will give Google developers the ability to provide a more consistent, web-based experience for many of its applications, including Google Play & Apps. The web version of these apps will be cloud-based, allowing users to have less local storage on their phones.
Google Reiterates that Android will remain open
A major concern for smartphone manufacturers using the Android platform was that the Motorola purchase would make the Android ecosystem more closed and unavailable to third party manufacturers. As a result, CEO Eric Schmidt, during the unveiling of the Motorola phones assured mobile manufacturers that the Android platform would remain open to them for use. This is important for Google as fears of being pushed out of Android could make the manufacturers shift to other competing operating systems such as the Windows Phone 8.
Overall, Motorola’s release of the trio of phones is not revolutionary for the industry, but it is a start for Google in its quest to capture mobile market share on the hardware front. We are anxious to see specifics of the Droid Razr HD and Razr Maxx as they will directly compete with Apple’s new iPhone 5 during the holiday season.
We currently have a $661 price estimate for Google, which is approximately 10% below the current market price.Notes:
- Motorola Debuts Three Smartphones Under Google Umbrella, Wall Street Journal [↩]