Interview: Motorola's CEO Dennis Woodside talks Moto X, tablets, wearables and what's next
Motorola, bought by Google in 2012 for $12.5 billion, is on a bit of good run of fortune at the moment. After almost two years of doing virtually nothing, in the past six months the company has launched the Moto X and the Moto G handsets in both the UK and the US both to critical and commercial acclaim.
That success has been associated in many ways to the new Motorola CEO, Dennis Woodside, who was bought in after the Google acquisition to turn the company around, to give it focus, and to give it a purpose.
Almost two years on and many see Motorola as a very different company from the one that created the Razr or came up with the "Hello Moto" marketing phrase, but is the company's success down to this realigned focus, and what plans does it have for the future?
Pocket-lint sat down in a one-to-one with the chief exec during CES to find out what the company stands for, whether Motorola is about to start making tablets, what he thinks on wearables, and just how young you should be when you get your first phone.
When we asked people to describe Motorola they said Razr, Hello Moto, and that company bought by Google. How would you describe Motorola today?
Those perceptions are normal. The reactions range from folks that are familiar with our new products and are excited where we are going, but lots of people's recollection of the brand is in the past.
We knew that we needed to create brands that are truly global and that stand for something. The themes we thought were important were customisation and giving consumers more choice over the device and creating much more affordable high quality devices for consumers in a very pure android way.
Those are the things that we wanted to pursue with our first products. Moto X being clearly the one that is all about customisation and Moto G being able accessibility to the mobile internet at a very reasonable price.
It takes a long time to turn around a brand. The Motorola brand had not been globally relevant in the smartphone world. It was relevant in the feature phone world, and the strategy Motorola was pursuing was very carrier centric, so developed different products for different carriers, but Motorola had not stuck with any one brand on a global basis on any one set of themes.
What have we have accomplished in the last 5-6 months since launching the products. Moto X has cemented Motorola as the number 3 premium smartphone player in North America. So you have Apple, Samsung, then us. That wasn't true nine months ago. So that's a positive.
READ: Moto X review
We are seeing a quarter of consumers who have a choice of using Moto Maker - that's customers in the US - are choosing to customise their phone. That's higher than we thought. And higher than what Nike's experience is with Nike ID or what Mini Cooper experiences with its cars. Most people buy stock product. Those consumers, 80 per cent of them are aged under 35. So it's a much younger audience than wants to participate in the design of the products.
We have been moving pricing around. $399 in the US now unlocked and unsubsidised. When we took the price on a promotional basis to $350 we sold 10's of thousands of units in 8 minutes in a like a flash sale. We did that twice over the holidays, and that really told us something. We really didn't know how big the market was in the US for unsubsidised devices. In Europe its pretty common. In the US most devices are subsidised. That was a real wake-up call, and we said: "Hey, lets pursue that market as well". Move our unlocked and unsubsidised price down to $399 everyday and that's generated a whole other momentum.
On Moto G we launched it in November in Europe and Latin America. If you go on Amazon in those territories, it's the number one selling smartphone or among the top 5. We launched it in America in late December and Verizon and Boost this week. On Amazon.com it's the number one selling unlocked smartphone in the US.
We are getting momentum, But to change the perception of Motorola as a brand it takes time. The Moto G is really helping spread the word though. The more people that see the Moto G, the value of Android 4.4 pure Android experience, we think that is going to create a really good halo effect for us and the brand.
Do you see yourself as a budget phone maker?
The way I see it is the cost of mobile computing is high compared to the desktop world, and there are multiple different things going on. If you think about growing up as a kid today it is a real disadvantage not to have a smartphone. At age 13, 14 or 15 you aren't going to be as connected to the world, you aren't going to be as educated, you aren't going to be as productive if you are in the work force.
We've gone from a society where the mobile internet was a luxury for the wealthy few that could afford the first smartphones to being truly an necessity for most people.
We think a big mission for us and Google believes in empowering everybody and not leaving anyone out, for us is driving affordability and driving the mobile internet for much lower price points, and making it much more affordable for people.
It just so happens that were all the growth is, not just in developing markets, but places like the US where the pre-paid market is the fastest growing market. If you think of an average family of four, for a family of give everyone an iPhone it is extraordinarily expensive, in the US it costs close to $1800 a year for a plan. People aren't going to do that, they are going to look at pre-paid services, and the operators are adjusting to this. They are offering much more flexibility in the plans they offer consumers.
We think we are on the right side of a trend, there's no reason the device in your pocket shouldn't cost $50 over time and be almost as good as the device that costs $500. People will still want the $500 device, but it is like cars, most people don't drive $100,000 cars they drive $20,000 cars. And that's where the market is the biggest. That hasn't been true in phones, but it will be.
When you should you get your first phone?
I don't know, that's a parental question. My son, who's 13 years old, tells me he is the last in his class to get a phone. It's certainly true that once you are in the workforce if you don't have a mobile phone or access to the mobile internet you are at a disadvantage. I don't know anyone in the workforce that doesn't have a smartphone. So at some point that happens.
Tablets: what's happening here and are you going to get back into the market?
For now we are focused on phones. We are looking at tablets. A lot of people have asked us to build a tablet using Moto Maker, to customise their tablet. There might be a day we do that, but the bigger opportunity for us is the 5 billion people without smartphones and the 1 billion people who have smartphones. That's where we are primarily focused right now.
Is that because of a lack of resources?
You need to focus, or we could go next door and start building refrigerators too. We have to decide and convince consumers we stand for something and what we are focused on is the mobile internet.
The phone is the product that makes the most difference in people's lives and that's going to be true for a long time. And that's Motorola's heritage is in mobile communications and that's what we are focused on.
What about wearables, do you see them as important?
Our primary focus is clearly on the mobile phone. There are two things that are interesting though. Motorola has always had a strong in-ear technology. Motorola's Bluetooth headsets are category leading in the Americas. We think there is a place that we can go there that is really interesting. Today the headsets are obvious and obtrusive. Could you expand the marketplace with a more robust and surreptitious earpiece? That's interesting to us.
The second is that we've had a smart watch for a long time, the MotoActiv, and we learned a lot about miniaturisation of sensors, power management with that product. We have some ideas, so I would say stay tuned.
There are lots of problems with wearables though that a lot of the manufacturers haven't thought of. If I look at your watch [it is a Pebble] it's not particularly stylish, the screen isn't particularly bright compared to your phone, it's breakable, it's a very fragile watch compared to my cheap Timex, and what's the killer functionality that is going to convince people to get it. A lot of manufacturers haven't answered those questions when they've released products. When we develop something that we are really excited about, we will put it out there.
But what about those tattoos you showed off last year, doesn't that go against that focus?
Regina's [Regina Duncan at Motorola] team exists to do stuff that is completely different. One of the things that she is working on is an open source modular based phone. Let's imagine that you could build a camera module in my garage in the same way people do apps at the moment.
I could then come up with an incredible zoom camera for example and sell that to that community. The belief is that you will get much faster innovation on the phone around the sensors that are embedded. It won't be long before there are prototypes. I've seen real models that work. I don't think it will take long for the developer community to start building stuff. How long it takes to get it into the market is a different question.
Why is this different from other modular based products that have come before it?
None of those have been particular open. If you open this up to the world, in the same way company's have done with apps, then people will come up with some really clever ideas. I don't know what people will invent, but if you do open it up good things will happen.
Moto G, Moto X, is that enough for now?
No, the reason we are here is we are talking about our 2014 line-up with everyone as you would expect. A couple of things we are going to pursue is we believe that this notion of customisation will continue to gain interest. Consumers aren't just going to want to adjust not the colour of the device, but the materials and ultimately the functionality. Some of our products for 2014 will encompass those desires.
Secondly we believe, and Moto G is showing us for sure, that there is a huge untapped demand for high-quality products at affordable prices. The Moto G is $179 unlocked in the US, that's inexpensive for the US, but that is expensive or mid-tier for the rest of the world. There is clearly room to go further to delivering more affordable devices to the consumer.
Should the Moto G have been a Nexus device?
No, Nexus is typically not a scale play. It is distributed by Google. The purpose of Nexus is not to sell 10's of thousands of units, it is to provide a mechanism to deliver software to the market. If you are going to commercialise software you have to do it on hardware. So Motorola's purpose is much broader than what Nexus is trying to do.
Naysayers keep on saying Android is still fragmented, is it?
What we want to deliver for Motorola customers is that the latest version of the Android software will be available to them faster than anyone else. We've done that with X and G. With X we were there with KitKat 19 days after the public push, and if you compare that to the past we've been over 180 days. If you look at HTC or Samsung in the US it has been over 90 days. There are bigger Android issues but you need to talk to the Android guys about that. We feel that consumers will migrate to devices that they believe will get good software support.
But do you think your customers really care, even Moto G customers?
Absolutely. People care about upgrades. It's a real big mistake to assume that people that want value products are stupid. That's a mistake, and a recipe for failure. Consumers who are buying value based products are really smart.It's just that they don't want to spend as much on a phone, which isn't a dumb decision. So you have to respect, and that's the problem with a lot of the industry is that they haven't respected those consumers in the way that they ought to. We think that's a big opportunity for us.
What's your phone?
During the show I am using a Droid Maxx because the battery is huge, but day to day I've gone for a wooden-backed Moto X.