But details are scant when it comes to what the device is, and what exactly makes it next generation.
The report, in the Wall Street Journal, suggests the previously undisclosed device is due for launch "sometime next year" and has already gone through a number of iterations.
A flexible screen has apparently been considered and abandoned on the XPhone, as have ceramic molds that would allow for unusual shapes and a panoramic camera with better color saturation. Some of the potential features were nixed as a drain on battery life. What features the end result will contain appears to be anyone's guess.
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Motorola Mobility CEO Dennis Woodside told the Journal his team was investing in "technology that will do something quite different than the current approaches." Other sources linked the XPhone to Google's purchase of Viewdle a "mobile-focused computer vision" company. Viewdle's website touts its team's experience in "face, object and gesture recognition."
Make of that what you will. Perhaps the XPhone will be able to lip-read your voice commands, or allow you to make hand-waving gestures in front of the phone, Minority Report-style. Whatever its secret sauce is, apparently we'll also be seeing it in XTablet form in the coming year or two.
Google spent $12.5 billion acquiring Motorola Mobility in May; it was by far the search giant's most expensive acquisition. Since then it has laid off roughly 20% of the staff. Google announced Wednesday it would be spinning off the Motorola set-top box division for $2.35 billion.