As I spent a good portion of the week considering the impressive move Motorola made by introducing a well-specced $179 smartphone, I realized they were doing something Nokia has been talking about doing for years. Never-mind for the moment whether Nokia should have gone all-in on Android before their risky and as-of-yet market share boosting bet on Windows Phone. In fact, I see that the thoughts I had in my head already being echoed by Stefan Constantinescu at Mobile Industry Review.
The thing is, as Stefan points out Google is printing money with their ad-based revenue model. They can, for all intents and purposes “give away” a smartphone for next to nothing. We already recognize that the company is likely subsidizing their own pricing on the Nexus 5 at $349 while the carriers are selling it off contract for $100 more. When you consider the Moto G has a 720p display, quad-core processor, 5 megapixel camera, customizable backplates and most of the Moto X software it’s really looking like an incredible deal. Perhaps we should say just how good of a deal it is in better context: you can buy three Moto G devices for the price of one iPhone 5s and still have money left over.
Circle back to Nokia and their origination of the idea that there is a huge market of people who want smartphones like the iPhone 5s, Galaxy S 4 or HTC One but can’t afford them. Hence Nokia created devices like the $150 Lumia 520, and it sells very well. In fact, it’s overwhelmingly the best-selling Windows Phone 8 device. The problem with Nokia’s plan is that it won’t reach the “next billion” because not enough people out there are accepting Windows Phone over Android or iOS. So Google is targeting the 500 million people expected to spend $200 or less in the next 12 months on their next smartphone purchase.
Yes, Samsung and HTC can push out their own sub-$200 handsets, but Motorola called those devices out on-stage referring to their sub-par displays and inferior customer experience. So, consider what Google is pushing out now for $180 and imagine what kind of spec-laced device Motorola and Google can push out 12 months from now for the same price.
There’s no question Nokia was the “first” to recognize that there is a huge market for smartphone owners who can’t afford flagship devices, but Google has the money and reach to succeed where Nokia cannot. Google isn’t by any means copying Nokia’s strategy, Nokia simply pointed out the obvious in a crowded smartphone market. Simply stated, Google is now in a position to actually succeed where Nokia imagined it could. Google’s Android system may be in the best position it has ever been and now that it is, Google can take some risks and a $180 smartphone is exactly that…but it’s a risk I’m betting pays off in spades.