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Can Motorola Revolutionize the Smartphone?

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Motorola is exploring the development of modular, customizable phones.

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Then there's the cost, both to the consumer and manufacturer. Based on the existing concept, a phone "kit" made up of modular parts will likely cost more to produce and purchase than a single, fully assembled, mass-produced device. Sure, an 8-megapixel camera is relatively cheap when it's inside a smartphone, but how much more will it be when it's a separate and fully contained module that can be cleanly and efficiently plugged in and out?

Manufacturers are also reticent to forge headlong into a project unless they are 100% sure they won't take a bath and be left with a warehouse filled with unsold devices. So how enthusiastic would they be when they're looking at the prospect of a mountain of unsold CPUs because a faster one came out a few months later?

Another nasty disincentive is a buzz term popularized in the iPhone (NASDAQ:AAPL) age: planned obsolescence. Naturally, the companies that make our phones want us to keep buying new phones from them, which is why the previous year's iPhone looks mighty archaic when compared to the one released in the current year. If customers were able to update their phone on the fly by only upgrading certain parts for a cheaper cost than a brand-new phone, that could mean far less profit for the manufacturer.

Speaking of Apple, you can pretty much guarantee that one of the biggest names in the tech world will not be part of Project Ara, or any other modular concept for that matter. Apple makes the iPhone, other manufacturers make Android, Windows (NASDAQ:MSFT), and BlackBerry (NASDAQ:BBRY) devices, and never the twain shall meet. While many third parties could theoretically jump aboard the modular bandwagon, Apple users, for better or worse, will be left with a locked-down, pre-assembled device as their only option. That's a huge demographic that will never be tapped with this phone.

Then there are the carriers to think about. AT&T (NYSE:T), Sprint (NYSE:S), and (to a much, much greater extent) Verizon (NYSE:VZ) want us to keep re-upping contracts with the purchase of a new phone every two years or so. (Or better yet, pay the early termination fee before the contract is up because a newer, better phone was just released.) And just to give us the little push toward the upgrade, devices sometimes less than a year old fall off the upgrade cycle and miss out on the software updates that would keep them running as fast and smooth as the newer models. Putting the power of the upgrade into the hands of the consumer is not at the top of their to-do list, so carrier support could very well be difficult to come by.

And finally, as painful as it is to face, we may be overestimating the demand of a modular phone. Sure, 17 million views in less than two months is nothing to sneeze at, and tech heads are frothing at the idea of building their own phone like the PC towers they built in the '90s. But how many average users are really going to fine tune a device they would normally take 30 seconds to consider before purchasing? Many consumers want a phone that "just works," a concept that has buoyed Apple sales into the billions. Even if customizing a phone to suit their needs would make them a happier user overall, many would prefer just pointing to one of the dozen middling, serviceable devices available for free on their current carrier and use it for texts and Facebook (NASDAQ:FB) posts.

Motorola's Project Ara is an exciting and esteemable concept, one that millions will doggedly monitor as it (hopefully) progresses. But as drool-worthy a project as it is, its realization might just not be in the stars.

See also:

Apple Earnings Review: Sometimes When You Lose, You Really Win

No positions in stocks mentioned.
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