The Moto X Is Google Inc (GOOG)’s New Nexus Phone

Google Inc (NASDAQ:GOOG) has reiterated that it remains committed to its Nexus phone program, where it collaborates extensively with an OEM to manufacture stock Android devices on its terms. However, all the leading OEMs (Samsung, HTC, and LG) that the search giant has historically partnered with for Nexus devices don’t appear particularly interested in more Nexus phones.

Where will Google Inc (NASDAQ:GOOG) get its next Nexus fix?

Medium shoes to fill
Motorola, the subsidiary that Google Inc (NASDAQ:GOOG) paid so handsomely for and continues to pay handsomely for, will make the new Nexus phone. It just won’t be called a Nexus. It’s the Moto X that investors have been hearing so much about. Motorola has expressed an interest in transitioning toward a stock Android experience, a stark contrast from most OEMs these days.

CEO Dennis Woodside did note in May that the Moto X will not run stock Android, though. In that regard, the Moto X would differ from Nexus phones, but it’s possible that the company could allow updates to a stock Android experience as it moves toward Google Inc (NASDAQ:GOOG)’s vision, or that the company has changed its plans since.

Rather, the Moto X fulfills the strategic purpose of Nexus phones. In fact, if you compare the aging Nexus 4 to the rumored device, the similarities become clear. The Nexus 4 was positioned in the mid-range of the market, sporting a $299 entry-level unsubsidized price tag and lacking LTE connectivity.

Details about the Moto X have continued to stream into the market. The device is expected to feature LTE, pack a QUALCOMM, Inc. (NASDAQ:QCOM) Snapdragon S4 Pro (the same processor used in 2012 flagships) instead of a newer processor, and sport a 720-pixel display. Most significantly, speculation about pricing has now emerged, and Motorola may price the device at the same $299 price point for a 16 GB model, which jumps to $349 for a 32 GB model. Those are the same price points as the Nexus 4, although for more storage in this case.

One goal of the Nexus program has always been to disrupt the subsidy model by targeting aggressive off-contract price points. In this way, the Moto X will do what the Nexus 4 before it did. In contrast, the Nexus 4 directly undermined carriers, and only one domestic carrier officially offered it (albeit at artificially inflated prices). This time around, Google Inc (NASDAQ:GOOG) has wised up and is seeking broad distribution with all four major carriers.

It might not be a perfect fit, but the Moto X fills the Nexus 4’s mid-range shoes.

Fool contributor Evan Niu, CFA, owns shares of Qualcomm. The Motley Fool recommends Google. The Motley Fool owns shares of Google and Qualcomm.

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