Motorola: Can We Make Android Phones Cheaper?

On Thursday, we wondered whether or not HTC would deliver a cheap Android phone. Now we know one vendor that will: Motorola. And, interestingly enough, it may not even qualify as a smartphone.

Motorola posted a third-quarter profit of $12 million on lower revenues of $5.45 billion, following the launch of the Droid and Cliq, although it was the profit that pleasantly surprised Wall Street. Motorola also predicted a heartening outlook, based on its commitment to Android phones.

Motorola has launched all the phones it plans to for the remainder of 2010, Sanjay Jha, the co-chief executive of Motorola and head of its Mobile Devices unit, told analysts. But in 2010, the company plans new phones (obviously) and new carriers, although Jha did not specify whether he was referring to domestic carriers or an expansion of its international customer base.

However, it appears that Motorola has about 40 phones on tap for 2010: 20 smartphones, of which most if not all will run the Android operating system. However, expanding into foreign markets may also require Motorola to adopt other operating systems or services, which Motoroa will have to consider, Jha said.

"Smartphone success for us in 2010 will drive, almost singularly, our financial performance in 2010," Jha said, according to a SeekingAlpha transcript.

Motorola still manufactures so-called "feature phones," more low-end devices that aren't optimized for the data-intensive, always-connected smartphones like the Droid. In this space, Jha noted, profits are rapidly declining. However, Motorola plans to use a pool of overseas ODMs, where Motorola will aggressively engage with to eke out a modest profit.

"In the ODM pool, I would say, that we expect similar scale of additional product portfolio to the smartphone product portfolio," Jha said, a statement that would imply that feature phones would make up the other twenty or so phones that the company plans to launch.

For Motorola, however, the key may be how cheaply Motorola can make an Android phone, and even whether it can manufacture an Android-based non-smartphone. For those who can't afford the initial $199, much less the $3800 or so a Droid will cost over the life of its contract, this may be the key quote:


"On the ASP, to the question of whether Android can be taken below $200 for wholesale -- without being specific about the negotiation and pricing, and so on and so forth, it's that kind of a range of pricing that will enable us to go address the feature phone marketplace with Android," Jha said. "And we have various different strategies for doing that but without saying whether it is 2010, 2011, whether it's $200 or $150 or $250, but it's that kind of a range that we need to deliver to really expand the scope of where Android can play and that's part of our strategy."


Those phones will likely run MOTOBLUR, Motorola's own interface and service layer. Jha described Droid as a "Google experience phone," where the look and feel of the device was set by Google.

"And MOTOBLUR will be in vast majority of our devices and as I mentioned earlier we are working to evolve MOTOBLUR to address other experiences which will deliver similar aggregation, similar solving of the problem, similar push to the home screen," Jha said. "And our testing so far has indicated there has been a very good consumer response to our new experiences also."