Tomahawk, WI 11/15/2013 (BasicsMedia) – There is more than meets the eye in Google Inc (NASDAQ:GOOG)’s foray into smartphone business. It is important mentioning that the front runners in this market so far are Samsung Electronics Co., Ltd. (KRX:005930) and Apple Inc. (NASDAQ:AAPL). The two companies have a wide range of devices for this market segment and their devices target the upper-market. Then there are a lot of players in the features phone manufacturing that feed the lower-market. The mid-market is not properly served and this creates a business opportunity which on the face value, Google Inc (NASDAQ:GOOG)  seems to be striving to appeal to with its Motor G.

GOOG’s backing of Motorola has empowered the latter

The acquisition of Motorola by Google Inc was a clever strategy by the search engine company to take on the established smartphone markers. With Moto G, Google Inc (NASDAQ:GOOG) and Motorola are not actually going for the high-end market; instead, the device is intended for the underserved mid-market. The fact that Moto G is lowly priced yet its features and specs nearly match those of the high-end devices like iPhones from Apple Inc and Samsung Galaxy from Samsung Electronics makes it a perfect competition in the market. It is definitely set to offer alternative to customers looking for budget smartphones.

The intension behind Nexus 5 from Google Inc

While Moto G has a target at the mid-market, Nexus 5 is a formidable competitor in the high-end market. It’s offered to check Apple Inc and Samsung. I think the pure reason behind Nexus is not generating revenue for Google Inc (NASDAQ:GOOG). Being that the smartphone comes at just a fraction of what the high-end smartphones ask for in terms of price, its aim is to drive down the cost of smartphones worldwide. Why would GOOG be interested in low prices for smartphones? The company’s core business is ad revenue, and the more people are able to get access to its website through mobile devices, the better for its top-line and bottom-line.

Can Google Inc bleed because of investing in low cost phones?

The fact that Google Inc (NASDAQ:GOOG) is pricing its mobile devices lower than the average market prices is worrying some investors. The concern is whether the company would bleed in the long run. It is important mentioning at this time that Google Inc (NASDAQ:GOOG) is not a poor company. GOOG has the financial muscles to dare face the red-hot competition in the mobile devices business. Given the company’s diversification, there is no way selling its smart-devices at a cost would weigh it down. Instead, in the long if it succeeds in driving down the cost of smartphones, it will be all smiles for the investors of the $345.37 billion capped company given that it will be having a stronger base to feed its ad revenue. And this is the ultimate goal in entering the smartphone market.

Can the smartphone front runner feel the pinch?

The entry of Google Inc (NASDAQ:GOOG) into the smartphone business with powerful yet cheap devices will no doubt hurt the leading smartphone manufacturers Apple Inc and Samsung. However, these companies have the option of transforming their operation cost so that they can adjust their smartphone prices to meet Google Inc (NASDAQ:GOOG) midway, while still maintaining good profit margins.

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