Will The Moto X Finally Justify Google Inc (GOOG)’s Acquisition of Motorola Mobility Holdings Inc (MMI)?

There are plenty of unknown hardware specifications at the moment, and even these could change in the future. However, based on these specifications, the Moto X doesn’t really bring anything new to the table. More than anything, the Moto X poses more of a threat to Laclede Group Inc (NYSE:LG) and Samsung, two of its Android allies, than to Apple. It also feels redundant, considering that most people consider the Nexus to be Google’s flagship brand. Why didn’t Google simply brand the Moto X as the next Nexus instead?

Therefore, if successful, Google would cannibalize its own market, and if unsuccessful, it would have wasted a lot of time and development costs. In addition, Motorola will still look like a $12.5 billion bridge to nowhere.

Does “Made in the USA” matter?

Google’s “Designed by you, assembled in the USA” ads which ran right before Independence Day were clearly taking a jab at Apple. As patriotic as that idea might seem, however, it rings as hollow as Google’s “Don’t be evil” mantra.

The truth is that Google’s partner Flextronics is based in Singapore, and has manufacturing plants all over the world. Google and Flextronics’ decision to move several plants back to the United States from China and Indonesia wasn’t made for patriotic reasons. It was due to the rising manufacturing costs across emerging markets, exacerbated by rampant inflation and a weak dollar.

Flextronics CEO Mike McNamara stated that costs in China have risen 20% annually, and that he expects this trend to continue over the next five years. He also noted that costs have risen 30% and 40% in Malaysia and Indonesia, respectively. Therefore, manufacturing the U.S. suddenly appears to be an attractive option, considering the lack of language barriers, the weak dollar, and proximity to the designing companies.

However, that’s not to say that margins will be better if Google’s Moto X and Apple’s Mac Pros are manufactured in domestic plants. They should still come in lower than their outsourced peers, but both companies are betting that the positive PR spin will help generate enough sales volume to make up for that slack.

The Foolish Bottom Line

Despite all of Google’s hype, I believe that the Moto X is destined to be another Android smartphone in a severely saturated market. Although it might get some exclusive Google features based on motion sensor and voice technology, it won’t have enough clout to shake the stigma of the Motorola brand, which is considered a faded icon of the past.

Steve Jobs once advised Google CEO Larry Page to focus on the things that the company did best and trim off all the extra businesses. Unfortunately, Google is still all over the map these days, and this latest venture into smartphones to justify its Motorola acquisition might be a pointless distraction from its core businesses of search and advertising.

Leo Sun owns shares of Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Leo is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Will the Moto X Finally Justify Google’s Acquisition of Motorola? originally appeared on Fool.com is written by Leo Sun.

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