Here Comes the Moto X (GOOG) (AAPL)

Google (Nasdaq: GOOG) is set to launch Moto X, a new smartphone developed jointly with Motorola, on August 1st. In the view of Goldman Sachs, the new phone may have important implications for competitor Apple (Nasdaq: AAPL), and could also change the company's relationship with Android partner Samsung.

The Moto X targets the midrange segment of the market and will not compete directly with Apple, so it may not impact iPhone sales in the short term. Long-term may be a different story, as Google attempts to build its own ecosystem. Google's entry into the market could also pressure margins.

"Part of Apple's competitive edge has come from the fact that it tightly integrates its hardware and software together, producing innovative synergies that its hardware-centric competitors have a tougher time matching over the long term. Google's unified approach with its Motorola subsidiary appears to recognize this advantage, and they are clearly seeking to match it," said Goldman Sachs analyst Heather Bellini.

"Nevertheless, the impact may be negligible if Google’s in-house phones fail to generate meaningful share or if Google’s efforts weaken the broader Android ecosystem by alienating key OEM partners," she added.

Regarding Google's relationship with Samsung, Bellini said, "Moto X represents Google's attempt to achieve higher levels of mobile monetization, as it does not have to pay TAC on this device and since a more meaningful presence in smartphones could help elevate Google’s bargaining positioning vs. Samsung and Apple. However, if Moto X fails to garner traction, this creates the potential for Samsung to ask Google to pay a higher TAC rate than it is currently paying, as Samsung looks to increase the revenues associated with after-market sales of its devices."

Goldman Sachs has a Neutral rating on Google with a price target of $950.00

For an analyst ratings summary and ratings history on Google (NASDAQ: GOOG) click here. For more ratings news on Google click here.

Shares of Google closed at $890.92 yesterday.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Google execs convened 'all-hands' meeting last week to address AI unit reorganizations amid staff concerns - Reuters
• JPMorgan Upgrades Genting Singapore (GENS:SP) (GIGNY) to Neutral
• JPMorgan Downgrades HomeCo Daily Needs REIT (HDN:AU) to Neutral