With the Moto G, Google is executing Nokia’s strategy better than even Nokia themselves

Google is a dangerous company. Most companies specialize in one thing, make money doing that one thing, and then invest a certain percentage of that money being made into expanding the business. Google, on the other hand, specializes in advertising, and all the money that they make from those little blue links for cheap Canadian prescription drugs is used to provide an inordinate number of services to consumers for nothing.

Enter the Moto G that was announced yesterday at a press event in São Paulo, Brazil. Google took control over Motorola Mobility about a year and a half ago, and they’re already applying the Google mentality to the once giant American mobile phone maker. Because Google prints money thanks to their ad business, they can sell an incredibly capable smartphone for just $179 unsubsidized.

How capable is capable? The Samsung Galaxy S III, launched in early 2012, had a 720p display, quad core processor, and an 8 megapixel camera. It also sold for over $600, though in the US and UK that cost was obfuscated with a two year contract. The Moto G has the same 720p display, albeit smaller and using LCD technology, the same quad core processor, though it’s four ARM Cortex A7 cores instead of four ARM Cortex A9 cores, and a 5 megapixel shooter.

Again, all that for $179. You can buy three Moto G phones for the price of an iPhone 5s and still have over $100 leftover to go out with your mates to the pub or take the misses out for dinner and a movie.

What does any of this have to do with Nokia?

Nokia was the first mobile phone maker to introduce the phrase “the next billion” into the mobile industry’s lexicon. Their thinking was that there’s a huge market out there of people who would love an iPhone 5s or Galaxy S4, but can’t afford one, so “cheap” smartphones like the $150 Nokia Lumia 520 were created.

Those cheap Lumias have been selling, that’s a fact. Nokia’s Q3 2013 financial results say the Finnish firm sold 8.8 million Windows Phones at an average selling price of $190, which is down from the $210 average selling price during the same quarter a year prior. In other words, Nokia knows that the future is cheap handsets, hence the creation of Lumia 520 and the Asha portfolio of feature phones that do more than your typical feature phone, but not enough that you can actually call them smartphones.

With the Moto G, Google says they’re targeting the 500 million people who are going to spend roughly $200 or less on a smartphone during the next 12 months. That’s not exactly “the next billion”, but it’s still a sizable market. On stage, Google called out the elephants in the room, Apple and Samsung, for their strategies of capturing the low-to-mid range segment. Samsung’s Galaxy Fame was mentioned, and mocked, for delivering inferior specifications. And Apple’s iPhone 4 was name checked as being too “old”, leaving consumers with only $200 to spend feeling like they’re relegated to the past.

How should operators feel about the Moto G? If I were in charge of a wireless network, I’d be thrilled. Earlier this year, Open Signal did some research on the relation between the size of a phone’s screen and how much data a person consumes. Their conclusion was that nearly 300 MB of data was consumed for every extra square inch of real estate. Offer your customers a phone with a larger display that’s packed to the gills with what are arguably the best internet services currently in existence, and sit back and watch your customers upgrade their data plans so they can watch more, read more, and chat more.

Looking out into the future, if Google can make a Galaxy S III class phone for $179 and launch it just 18 months after the Galaxy S III hit the market, just think of what we can expect from Motorola this time next year. It might seem hard to imagine now, but a large 1080p smartphone at under $200 that delivers Google’s vision of a connected device will be on store shelves all around the world.

It wasn’t that long ago when you needed to be a businessman to be able to spend several thousands of dollars on a briefcase sized appliance that let you make phone calls while out in the field. Today you can do that with a $25 Nokia phone. The same will happen to smartphones, and the fact that Google is accelerating this trend, because they frankly don’t care about profit and would rather break even, is something to be excited about.

Whether you’re a consumer, an operator, or a developer looking to sell apps, Google executing on the vision Nokia has been talking about for the better part of the last half decade is a welcome thing.

[Image Credit: TechAdvisor]

Update: For those who want to watch the Moto G press conference, it’s only 31 minutes long.

  • icyhotonmynuts

    I really wanted to watch the video but the fact that Dennis kept looking down at the floor, or presumably the teleprompter telling him what to say, really irritated and distracted me. Don’t you know what your own product is? Why are you reading from electronic cue cards? I know he’ll never read this comment, just had to ask it anyways.

  • http://www.i2SMS.com/ Giff Gfroerer, i2SMS

    Stephan, how important is the lack of 4g in this handset? With markets turning to 4g, will that hold this phone back? The lack of NFC will have no bearing at all. The lack of 4g may hold a good deal of folks away, don’t you think?

  • GentlemanScholar

    The teleprompter doesn’t “tell you what to say” just as your note cards don’t tell you what to say. Why people have created this myth about using a teleprompter in lieu of using notes as being a sign of ignorance is beyond me.

  • Jefficko

    Lack of 4G is a big deal? I don’t think so. 3G is 14.4mbps max and its great speed when you compare it to most folks around the world who arent going for the latest and greatest and perhaps have internet connection with 3-5mbps at home via WiFi. This phone is just GREAT and I will reccomend it to every single person interested in a device not willing to pay 300+ bucks.

  • perfectlyreasonabletoo

    IIRC it’s capable of HSPA+, which means a max of something like 42 mbps.

  • perfectlyreasonabletoo
  • http://whatleydude.com/ James Whatley

    Misses << Mrs

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  • Stoli89

    “Teleprompter dependency” was the line the Republicans often used against Obama during his first term as US President. They continued on this tact until he asked to join their caucus retreat and gave a 45 minute speech (without teleprompters) followed by an unscripted 1 hour Q&A…where he fielded questions from all of the Republican leadership. Obama so badly schooled them on live TV that the Republican leadership was caught commenting afterwards…”we won’t be doing this again.”

  • Stoli89

    This article only reinforces my view that Nokia is out of the smartphone business “permanently” because the opportunity for huge profits has passed. It was on that train with a ticket (a first class ticket), stepped off for a smoke, and missed the departure (~ 5-6 years ago). With the arrival of Chinese and Indian OEM’s to the world market plus off-the-shelf cookie cutter SoC’s with massive computational power, the opportunity to differentiate and extract value will be left to those that lead ecosystems. It’s far too expensive at this stage to attempt that AGAIN…and the highway is littered with roadkill from those that have already tried. Apple has certainly proven that you don’t need to burden a balance sheet with obsolete prone manufacturing assets in order to protect quality and the perception of innovation.

    Unless Nokia has some R&D magic up its sleeve that can provide enough differentiation to justify a re-entry, I tend to think Espoo has already moved on. The smartphone has become commoditized like clothing…with branding and fashion trends becoming key areas to drive sales…utility is a given. In some ways the hardware has been reduced to a key…whose primary function serves as entry into an ecosystem of services.

    As for Jolla…I simply don’t see it beyond catering to a very devoted and vocal fan base. Volumes will remain niche, at best. I hope I am wrong as I always like to see the underdog get a fair chance in the game and win. However, I cannot fathom how Jolla intends to overcome the competition’s scale given multiple fronts of exposure. Maybe it can do a judo move on Google and leverage the behemoth’s ecosystem to its own hardware sales benefit…but again…that’s only helping Google’s higher margin business. In the end, Jolla will remain part of the same race to the bottom. IMHO.

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