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Motorola Mobility unveils Xoom tablet to take on iPad

By Ian King and Hugo Miller
(c) 2011 Bloomberg News
Thursday, January 6, 2011; 9:56 AM

Jan. 6 (Bloomberg) -- Motorola Mobility Holdings Inc., the newly independent mobile-phone maker, unveiled a tablet computer that uses Google Inc.'s latest operating system, aiming to chip away at the dominance of Apple Inc.'s iPad.

The device, called Xoom, will run Google Inc.'s Android 3.0 Honeycomb software, sport a 10.1-inch screen and use a speedy dual-core processor, Motorola said yesterday at the Consumer Electronics Show in Las Vegas. Verizon Wireless will provide service for the Xoom. Motorola Mobility also introduced a phone called the Atrix that will run on AT&T Inc.'s network.

The company enters a crowded field of tablet competitors, all trying to replicate the success of Apple, which sold 4.19 million iPads in the quarter ended in September. The market includes Research In Motion Ltd.'s PlayBook tablet -- still in the works -- and Samsung Electronics Co.'s Galaxy Tab. The Tab also runs Android, though Xoom will be the first to use the new Honeycomb version, Motorola Mobility said.

"It's the most competitive product in the marketplace," Chief Executive Officer Sanjay Jha said at the event. "We are hoping to deliver the first version of the device into the marketplace in the first quarter."

Jha, who demonstrated a new version of Google's mapping program on the tablet, said the software "isn't quite done yet" and that Motorola isn't ready to let potential users try it out. The initial version will feature 3G wireless connections, which could be upgraded to 4G in the second half of the year, he said.

The lack of pricing details was surprising, said Tero Kuittinen, an analyst at Stamford, Connecticut-based MKM Partners. The tablet needs to cost less than $500, after subsidies, to be competitive, he said.

"I don't think it's going to be well received by Wall Street," Kuittinen said.

Separately, Research In Motion said it will begin selling a version of its PlayBook that runs on fourth-generation networks by this summer. The model will work on Sprint Nextel Corp.'s 4G system, boosting download speeds by up to 10 times, the Waterloo, Ontario-based company said in a statement.

Motorola's tablet gambit came a day after the company began trading as an independent company, following a spinoff from parent Motorola Inc. While the stock jumped almost 10 percent in its New York Stock Exchange debut, analysts have a mixed outlook for the stock, with 15 of 24 rating it a "buy."

"While the business has returned to profits after deep operating losses the last few years, we see some headwinds," Tim Long, an analyst at BMO Capital Markets, said in a research note this week. He initiated coverage of Motorola Mobility with a "market perform" rating.

In the U.S., Motorola's dependence on Verizon Wireless for revenue is a concern, and "we have yet to see credible entry- level Android smartphones for the emerging markets," Long said.

Motorola Mobility rose 38 cents, or 1.2 percent, to $32.59 at 9:46 a.m. in New York Stock Exchange composite trading.

© 2011 bloomberg.com