(VZ) Motorola Mobility Holdings Gears Up for the Holiday Season

Motorola Mobility Holdings Inc.(MMI) recently expanded its product portfolio by launching two latest versions of XOOM tablets namely, DROID XYBOARD 10.1 and 8.2. These new tablets will be sold through Verizon Communication Inc. (VZ) stores along with the company’s massively popular DROID RAZR smartphone. Furthermore, these devices can be upgraded to the latest Android 4.0 (Ice cream Sandwich) operating platform.

Both the Android 3.2 based DROID XYBOARD tablets feature Verizon’s 4G LTE network, dual-core 1.2 GHz processors and Wi-Fi connectivity. These tablets also comprise 5-megapixel rear-facing HD cameras and 1.3-megapixel HD front-facing cameras. XYBOARD 10.1 inch tablets are priced at $529.99 (16GB), $629.99 (32GB), $729.99 (64GB) while XYBOARD 8.2 inch tablets are priced at $429.99 (16GB), $529.99 (32GB). The new tablets as well as the smartphone come with a two year Verizon Wireless connection.

As the Christmas holidays are approaching, most of the tablet manufacturers are undertaking various initiatives like providing huge discount for their unpopular tablet products in order to clear inventory backlog or by launching upgraded tablet version to gain market traction.

The same trend is visible in the smartphone market, where Apple Inc’.s (AAPL) newly launched iPhone 4S is gaining huge popularity. Moreover, the launch of Samsung Electronic’s Galaxy S2 will further increase competition among different smartphone manufacturers during this holiday season.

Recently, Research In Motion Ltd.,(RIMM) also slashed its PlayBook tablet price from $499 to $200 in order to reduce inventory cost as well as to target the low-end tablet market just like Amazon.com Inc. (AMZN). Most companies are offering huge discounts to gain traction in the low-end market, as the high-end market is mostly dominated by Apple’s iPad 2.

So it is to be seen how Motorola Mobility’s new product range targeted toward the high-end market competes with Apple’s newly launched iPhone 4S and iPad 2 tablets.

Earlier, Google Inc. (GOOG) entered into an agreement to acquire Motorola Mobility for $12.5 billion, subject to regulatory approvals. Presently, Motorola Mobility holds rights for approximately 24000 patents, which Google is mainly eyeing. Moreover, the company is one of the leading players in the set-top box category, which makes it another lucrative opportunity for Google as the latter is aggressively rolling out the next-generation smart TV option called GoogleTV.

However, lack of product differentiations coupled with stiff competition from other cheap smartphone makers will act as headwinds for the stock going forward.

We, thus, maintain our long-term Neutral recommendation for Motorola Mobility Holdings Inc. Currently, Motorola Mobility Holdings Inc. has a Zacks#3 Rank, implying a short-term Hold rating on the stock.

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