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Ara 185Google’s Motorola Unveils Modular Smartphone Project

Samsung is a massive company with a spectacularly broad product range, but its mobile division accounts for 66% of total profits. If you wanted to hurt Samsung, threatening its smartphone sales is the way to do it. Google’s Motorola division just announced a new project called Ara that seems tailor-made to put a scare into Samsung. The Project Ara team says: “We want to do for hardware what the Android platform has done for software.”

Ara is built around the concept of the smartphone as a series of user-replaceable components with a large group of third-party manufacturers offering compatible technology.

In other words, consumers can assemble their own smartphones to look the way they want, to do what they want and to cost what they want. There isn’t necessarily a single manufacturer. And they don’t have to upgrade the whole device for new technology (such as a better display, battery or even a physical keyboard) —they simply swap out the component. Goodbye upgrade cycle.

But wait, if Ara were a reality, wouldn’t it hurt Motorola? The division is on pace to cost Google $1 billion this year, so if it switched from making smartphones to making smartphone components, that would hardly harm Google, and might actually improve the bottom line.

In the meantime, imagine what Ara would do to Samsung, which is hugely reliant on yearly Galaxy smartphone upgrades.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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