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Forget Samsung, Motorola Could Be Apple Inc. (AAPL)’s Biggest Threat

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Before the emergence of Samsung’s Galaxy devices, Motorola Mobility’s Droid phones were the closest thing Apple Inc. (NASDAQ:AAPL) had to a true smartphone competitor. Now, Motorola is planning to reignite the rivalry this year. Its Moto X smartphone (previously known as the “Xphone”) will be available by October.

Apple Inc. (NASDAQ:AAPL)

Moto X

Motorola’s CEO Dennis Woodside revealed the company’s plans for its smartphone division on Wednesday. During an interview at the D11 conference, Woodside said the Moto X would be available sometime between now and October.

The Moto X has been at the center of a great deal of media speculation over the last few months, primarily because Google Inc (NASDAQ:GOOG) now owns the company.

According to Woodside, that gives Motorola somewhat of an advantage — it can’t give the phones away, but it can afford lesser profit margins.

Reports have indicated that the Moto X would offer unprecedented durability for a smartphone. That could be true, but it seems the phone’s sensors will really make it stand out. According to Woodside, the phone can react to its environment. In fact, it will be “contextually aware” of what’s going on, able to tell if the user is driving down the highway, for example.

In that context, back during Google’s I/O conference, CEO Larry Page made a comment that seems relevant. Page remarked that, prior to coming onstage to speak, he had to make sure that his phone was turned off. That’s kind of pain — shouldn’t the phone be smart enough to do that for you?

Without actually seeing the Moto X, it’s hard to speculate on its potential sales. But that kind of smart environment sensing sounds both unique and promising — certainly more promising than some of Samsung’s latest features, which have been criticized as gimmicky.

A competitive smartphone landscape

There’s a big misconception about the smartphone market: it isn’t a two-horse race. While it’s true that Apple Inc. (NASDAQ:AAPL) and Samsung account for just about all the profit earned in the smartphone industry right now, in just the last few months, the market has become much more complex.

First, there’s the recently released HTC’s One, which has received rave reviews from tech critics, many of them arguing that the device is superior to Samsung’s Galaxy S4. Then, there’s Sony Corporation (ADR) (NYSE:SNE), a company currently attempting to reinvent its electronics division. So far, in the last few weeks, it has trotted out waterproof Android phones in the form of the Xperia Z and Xperia ZL. At the same time, LG offers a number of quality phones, such as the incredibly cheap Nexus 4, released last fall.

This is to say nothing of phones with other operating systems, like Research In Motion Ltd (NASDAQ:BBRY) BlackBerry’s new BB10-based offerings, or Nokia Corporation (ADR) (NYSE:NOK)’s various Windows Phone-powered Lumias, such as the just-released Lumia 928.

The Moto X will simply be another competitor, although by the sounds of it, a very innovative one.

Apple will continue to face margin pressure

What this means is that Apple Inc. (NASDAQ:AAPL) should continue to see its profit drop in the coming quarters. The company remains heavily dependent on the iPhone for the majority of both its profit and revenue, and new competition certainly won’t help.

Of course, Apple Inc. (NASDAQ:AAPL)’s critics have been claiming the iPhone was going to get crushed by the competition for years. But something seems to have changed since last summer.

The Samsung Galaxy S3, with its larger screen, was really the first device commentators have accepted as a legitimate alternative to the iPhone. Samsung followed that up with the Galaxy Note 2; in the process, creating an entirely new market (the phablet) that Apple Inc. (NASDAQ:AAPL) has yet to enter.

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