Motorola eyeing low-end market with new waterproof phone

Motorola introduced an upgraded line of smartphones on Tuesday but the real news wasn't the hardware. More significantly, Motorola made clear it plans to bring its low-price, direct sales business model that has worked so well in Brazil to the U.S. market.

The new three-phone lineup starts with a flagship device, dubbed the Moto X Style, with a 5.7-inch screen and all the requisite bells and whistles of leading phones from Apple (AAPL), Samsung Electronics (005930.KS) and LG. That phone will sell online for $400. But it's the bottom of the new lineup, the low-end $180 Moto G, that may have the most impact.

Prior versions of the G have topped the sales charts in Brazil over the past few years. The phone defines "good enough" with a 5-inch screen that would have been among the best on the market in 2012 or 2013, a decent camera and the same Google (GOOGL) Android operating system that runs on all the high-end models. This year's model is also waterproof, protecting the phone from spills, rainstorms and even a short dunk in the pool.

In Brazil, consumers snapped up the Moto G via online sales to connect to inexpensive service plans. Motorola is hoping the same strategy will work with U.S. consumers and plans a big web sales push for the unlocked phone, which can then be used on almost any carrier, including cheaper prepaid services.

"It is the ultimate democratization," Jeff Miller, Motorola vice president and head of North American phone sales, says in an interview. "It puts choice in the hands of the consumer and allows them to switch carrier to carrier if they choose."

It's not a pure-play strategy. The higher-end Moto X Style will also be available online. And along with the major online push, a few U.S. carriers including Sprint (S) and U.S. Cellular (USM) will carry the Moto G, Miller says.

Yahoo Tech's Dan Howley took a closer look at the G and the more expensive X Style phone after Tuesday's announcement and was intrigued by both models.

Some Chinese smartphone makers such as Huawei and ZTE have been selling cheap phones directly in the U.S. market but the strategy hadn't been embraced by any of the major suppliers yet, notes Anthony Scarsella, a research manager for mobile phones at IDC. Most phones are still promoted, marketed and sold through carriers, he says.

"The idea of direct-to-consumer is still a very new trend here," says Scarsella. "The lack of carrier support could potentially hurt sales, and consumers could ideally just miss out on it."

Trends in the U.S. market, however, could bolster Motorola's gambit. Led by T-Mobile (TMUS), U.S. carriers have slowly been eliminating phone subsidies, encouraging customers to either pay in full (usually via a monthly installment plan) or bring their own device. Affordable, unlocked phones like the Moto G should gain under such plans, says Neil Shah, a partner at Counterpoint Technology Market Research.

"Moto G should drive this trend and should help Motorola ramp up back into the market with these solid offerings," he says. Motorola, now owned by Chinese tech giant Lenovo, has a market share that is a shadow of its former glory in the years before smartphones took over the mobile phone market.

Still, the low-end device probably won't threaten Apple and its much higher priced iPhones. Apple appeals to the wealthiest demographics and those who already appreciate its unique iOS software and media ecosystem. The threat from the Moto G is more likely a problem for Samsung and other high end Android makers, as it has been in Latin America already.

So-called good-enough phones have done severe damage to the high-end Android phonemakers in many countries outside of the United States, particularly in China. Motorola is hoping to spread the damage back home with its new line.