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Rick Osterloh on Motorola's New Products and the Future With Lenovo (Q&A)

Motorola's president says the transformation of the phone maker is complete and its future secure despite increased competition.

Ina Fried

While Motorola’s corporate parentage is in limbo, President Rick Osterloh says the phone maker has found solid ground.

“We think we are taking a different approach than anyone,” Osterloh said in an interview Thursday, following the launch of the Moto 360 smartwatch and debut of an updated Moto G and Moto X.

The company has focused on delivering relatively high-end smartphones at affordable prices. While that space would appear to be growing more crowded, Osterloh thinks Motorola can succeed by offering pure Android along with customization options that rivals don’t have.

“Certainly we are in a very competitive industry,” he said. But Osterloh thinks that the companies most at risk are those focused on the high end of the market. “I think the days of the $600-$700 smartphone are numbered. People are realizing they don’t need to pay that much money.”

Below is an edited transcript of our conversation. (Osterloh will have even more to say when he takes the stage at our Code/Mobile conference, which takes place Oct. 27-28 in Half Moon Bay. A limited number of tickets remain.)

Re/code: Is the transformation of Motorola complete? Do we basically have a good sense of what Motorola is at this point?

Rick Osterloh: A picture has clearly emerged, which is our future strategy. We are going to focus on a handful — a small number — of great products. We are going to offer end consumers the power to choose. We are going to be a company that is accessible, that includes people, that is within reach. This is going to be our course for the long term.

Do you still expect the Lenovo deal to close this year?

It should close this year. No change on that. Timing is still a little uncertain.

What level of interaction and planning with Lenovo are you able to do?

We’re operating independently, clearly. We are able to do forward planning about things we might do together. We are very aligned strategically where we want to go long-term.

We know which capabilities we want to take advantage of as part of Lenovo and vice versa. The synergies are obvious. One key one is [that] immediately we will cover many more countries than we are in right now. Motorola is in around 45 countries at the moment and Lenovo is in a lot higher number.

The Moto products or the Moto brand?


Motorola has carved out a niche that didn’t exist with Moto X and kept it going with Moto G and Moto E. At the time a lot of inexpensive smartphones were using older software and had limited memory. That idea is no longer unique to you guys, though. How do you stand out?

We think we are taking a different approach than anyone. We want to give people real meaningful choices. We want to make it so you can choose to participate in the design of your phone like with Moto X. We give people the ability to change the user interface the way they want on their phone. That software story is quite different than what other people are doing.

Certainly we are in a very competitive industry. I think the days of the $600-$700 smartphone are numbered. People are realizing they don’t need to pay that much money.

Has the move away from subsidized phones in the U.S. helped you?

The U.S. pricing picture has actually gotten more confusing for consumers. Now it’s a combination. Most phones are actually still purchased on subsidies. However, there are monthly pricing options and family options. Frankly, it is pretty overwhelming for most consumers.

We did see a great surge in off-contract phones when we launched the original Moto X and Moto G. That still represents a minority of the market for sure. One of the biggest growth areas here in the United States is prepaid. There are still a lot of feature-phone users in the U.S., and we are serving that segment with Moto G and Moto E.

Outside the U.S., it is a totally different picture, depending on the country. Markets like India and Brazil and parts of Europe, where we have seen very rapid share improvements when consumers get the full benefit of price transparency. That’s been tremendous. That’s why we are No. 2 in Brazil and No. 4 in India after coming out of nowhere, basically. We love markets where the end user gets to benefit from price transparency.

Are you continuing to do a separate set of products for Verizon in the Droid family?

Verizon is a key partner for us. They have been unbelievably supportive. We really like what the Droids are offering to consumers, and it’s different than what the Moto products are offering. We intend to keep working on Droids.

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