Motorola targets iPhone as Google goes on attack

The rivalry between technology heavyweights Apple and Google is set to heat up again as the latter's Motorola Mobility unit prepares to release a new smartphone designed to take on the iPhone just as it struggles to hold onto its market share.

The Moto X will be assembled in the US and packed with sensors that its software will draw on to tailor its functionality to its surroundings, adjusting how it works, for example, when it detects the user is driving a car or when they take it out of his or her pocket, Motorola's chief executive, Dennis Woodside, told a technology conference without giving precise details.

"It's in my pocket but I can't show it to you," he said, indicating that the new handset would be out later this year. It is likely to be priced lower than the latest incarnation of the iPhone – the iPhone 5 – which remains a premium product, in line with Apple's long-standing strategy.

Moto X will be the first major launch by the Motorola Mobility business, whose devices run on Google's Android operating system, since it was bought by the search engine giant in 2012.

Confirmation of the long-rumoured device comes as Apple struggles to convince investors that its iPhone business has what it takes to compete in an increasingly crowded field. For years iPhones were the only show in the smartphone business – but now rivals are eating into its territory, in many cases by offering customers the chance to own a hi-tech smart device without straining their budgets.

Samsung, which also uses Google's Android system, has been particularly successful, attracting hordes of customers around the world with its Galaxy line.

By the end of the first quarter of this year, Samsung had shipped "more units that the next four vendors [including Apple] combined," according to market researchers at IDC.

In all, its worldwide share of the smartphone market stood at a healthy 32.7 per cent in the first quarter of 2013, up from 28.8 per cent in the first quarter of 2012. Apple's, in contrast, was 17.3 per cent, down from 23 per cent. Motorola has an uphill task in taking on Apple and Samsung, with a market share in the very low single digits.

Part of the pitch when it debuts the new phone is likely to focus on where the Moto X is assembled: in the USA, compared to the alternatives which are made in Asia, usually China.

Mr Woodside told the All Things Digital Conference in California on Wednesday that Motorola will assemble the new device at a former Nokia facility in Fort Worth, Texas. Apple's devices, in contrast, say that they are "Designed in California" but made abroad. The iPhone-maker recently announced plans to bring some manufacturing connected to its Mac computers back to the US.

In Motorola's case, while many of the key parts such as processors and the screens will be shipped to the US from Asia, Mr Woodside said that 70 per cent of the assembly will be done in the US.