Google Inc (NASDAQ:GOOG) is expected to launch its new Motorola X smartphone during a two day event with the press at its campus on July 10-11, according to analysts at Bank of America Merrill Lynch (BAML) citing reports that the search engine giant invited 50 members of the media.
BAML analysts Justin Post and Joyce Tran reported that the speculations that Google Inc (NASDAQ:GOOG) will unveil its new Motorola X smartphone during the press event were intensified by advertisements in The New York Times, USA Today, and The Wall Street Journal featuring the product.
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Based on Google Inc (NASDAQ:GOOG) advertisements, the new Motorola X smartphone is the first product designed by the tech giant and allows consumers to co-design the device. According to the analysts, it is unclear how the customization works, but one thing is sure, the smartphone will be made in America, and it will be manufactured in Forth Worth, Texas.
Moto X Launch Carefully Timed to Event and Product Cycles
In a note to investors, Post and Tran emphasized that Google Inc (NASDAQ:GOOG)’s timing for the launch of the new Motorala X during the event is appropriate. “We think the unveiling of the Moto X is the likely subject of the press event given Google’s comments suggesting a 12-18 month Motorola hardware product cycle revamp (the acquisition was completed on May 22, 2012),” according to the analysts.
Post and Tran also relayed speculations from several websites that Google Inc (NASDAQ:GOOG) will make the Motorola X Phone available as early as August 1. Post and Tran opined that the device will serve as a litmus test to see if the tech giant will be able to design and produce Motorola hardware products as the same or better quality compared with its Nexus products.
The analysts said that hardware is important for Google Inc (NASDAQ:GOOG) because of three reasons. Google with Motorola Mobility Holdings Inc (NYSE:MMI) help shape hardware innovation as the tech giant sees opportunity to develop devices to take advantage of the functionality of its Android operating system. It will also ensure that that Android’s evolution will not be dependent on competitive hardware vendors.
Post and Tran pointed out, “A strong Motorola product line up could also help ensure that the Android O/S is not dominated by a single hardware vendor which reduces partner concentration risk.”
In addition, the analysts also said that Motorola Mobility Holdings Inc (NYSE:MMI) devices would likely showcase Google apps and could provide a better UI than some of its competitors, and provide opportunity for Google Inc (NASDAQ:GOOG) to operate a profitable mobile hardware business or to affect the margins or market share of high-end products particularly from Apple Inc. (NASDAQ:AAPL).
Post and Tran reiterated their Buy rating for Google Inc (NASDAQ:GOOG) with a $975 price target.