Motorola Goes on the Offensive Against Apple Watch

By Markets Fool.com

Continue Reading Below

Image source: Motorola.

Just days after Apple began taking pre-orders for Apple Watch, Motorola is already going on the offensive with its Moto 360. Google now sells the Android Wear device for just $165, a hefty discount from the typical $250 that the Moto 360 was originally priced at. The Moto 360 also got a price drop on Amazon.com last week.

The war has begun.

The best Android Wear device
The broader smartwatch market remains tepid right now, since the mainstream consumer still needs a compelling reason to adopt wearable technology. But the Moto 360 was easily the most successful among the first wave of Android Wear devices, so in a way it is a leader within the Android camp.

The initial inventory of the Moto 360 sold out within three hours when it went on sale last September. Two months later, Canalys estimated that the Moto 360 grabbed 15% of the smart band market during the third quarter of 2014. Earlier this year, the same research firm said that the Moto 360 was constrained during the fourth quarter, calling it the "clear leader" thus far.

Continue Reading Below

Even the most expensive Moto 360 is now cheaper than the most affordable Apple Watch, which starts at $350.

Stop me if you've heard this one before
This storyline may sound familiar. Apple prices its gadgets at the premium end of the market while commoditized Android vendors battle each other for the low end. Android will dominate unit market share, while Apple gobbles up profit share.

Broadly speaking, the same trend will very likely play out for the nascent smartwatch market, and this Moto 360 price cut is just the first evidence. Strategically speaking, what remains to be seen is whether or not any Android Wear OEMs will be able to position themselves as "fashion" companies in the way that Apple is attempting to do. Even Apple's fate is uncertain at this point.

But Apple has a much better chance at selling a $10,000 smartwatch than all of its Android Wear rivals combined. I'd be surprised if any Android Wear OEM, be it Samsung, Sony, ASUS, LG, or Motorola, could get away with selling a smartwatch with a five-digit price tag. The only way Apple can conceivably accomplish such a feat is by positioning itself as a fashion company. The only reason Apple could be considered a fashion company is that it's already considered a lifestyle company. It just also happens to make consumer electronics.

Goodbye, Moto?
Canalys estimates that there were a grand total of 720,000 Android Wear devices shipped throughout all of 2014. By the looks of it, Apple took over 1 million Apple Watch pre-orders in a single weekend. The product mix was probably skewed toward the lower end Sport models, but even an average selling price of $500 would yield a $500 million weekend.

For now, it's entirely possible that Apple is winning the smartwatch race in terms of unit market share and profit share. And Apple Watch hasn't even officially shipped yet.

The article Motorola Goes on the Offensive Against Apple Watch originally appeared on Fool.com.

Evan Niu, CFA owns shares of Apple. The Motley Fool recommends Amazon.com, Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.