Google’s Motorola is set to launch the long-awaited Moto X smartphone on August 1. The major question that arises is: How can this device differentiate itself in the market?

There have been more leaks around the Moto X than I can count. Some of them may be true; others not. Other things have not been addressed in the leaks. Let’s deal with each of the possibilities:

1. Hardware: How to out-engineer Samsung?

The Android smartphone market is flooded with devices from dozens of companies. The market is so competitive that nobody except Samsung makes any money in the Android world. One really has to ask if the market needs Motorola as the umpteenth Android.

If the leaks are true, the Moto X looks to be no match for several of the leading entries in the Android market today, including Samsung: 720p screen, 4.5-4.7 inches, no cutting-edge CPU. I mean, seriously? These are the Samsung Galaxy S3 specs from May 2012, which is ancient history in the smartphone world.

2. Customization: Jewelry, gimmick, hip or just irrelevant?

It is widely believed that Motorola will use the domestic U.S. manufacturing situation to its advantage by offering some degree of device customization. This includes a choice of colors and perhaps engraving.

For the life of me, I don’t see why this is significant. Why would I possibly care what color my phone is as long as it doesn’t look weird or objectionable? This seems like a solution in search of a problem.

3. Software: Lots of possibilities, but hard to get right.

There is no doubt that there are multiple ways to improve the Android OS. My two favorites would be to plug the two aspects that keeps me from getting rid of Apple (AAPL) iOS in my stable of devices: Podcasts and AirPlay (wireless display to TV).

Currently, Android’s offerings in terms of podcasts and AirPlay-equivalent are somewhere between nonexistent and deeply inferior to how Apple does them. If Android plugs these two holes, I will be ready to ditch my iOS devices in favor of 100% Google.

The problem with this theory is that almost every Android software improvement of which I can think — including podcasts and AirPlay — really should be part of the standard Android offering, not some sort of third-party application exclusive to Motorola.

Instead of these important improvements, the leaks around the Moto X software have pointed to various sensors and behaviors. For example, the Moto X is supposed to be able to tell if I’m driving.

But why? We don’t know yet, but I suspect that there is some sort of Big Brother ambition here. If Moto X thinks I’m driving, it will disable all sorts of functionality on my smartphone, supposedly.

Yeah, I need that as much as I need a bar without alcohol. I don’t want the Moto X to be able to tell if I’m driving in the first place, let alone sabotage any functionality as a result. If this is true, the only person who will voluntarily buy the Moto X is New York Mayor Mike Bloomberg.

Besides, what if I’m just a passenger — whether in the car or on a bus? How would it know? Could I disable Big Brother?

Another feature straight from Mayor Bloomberg’s mansion — or the NSA, for that matter — is the idea that Moto X will constantly listen, regardless of whether the phone is turned on or not. The concept here is that you’ll simply be able to tell it some voice command, and it will recognize your voice and execute the order, without you needing to touch the phone.

You could just bark “Google, remind me to pick up a gallon of milk on the way home from work” without touching or typing anything.

If this is true, the paranoia surrounding Google Glass privacy concerns will seem like small potatoes. We really don’t know exactly how this will work, but some will argue that by having the Moto X, you are essentially volunteering your room to be bugged at all times. No way that the NSA or the IRS would ever issue a subpoena for that information — no way at all.

Certainly, Motorola would claim that nobody is storing this information for long, and that the use is innocent and only there to help you. Good luck with that argument! If this is part of Moto X, I predict that it will be shunned by many people.

In other words, it’s hard to get software right if you’re Motorola. Your attempts is likely to drop into either of these three buckets:

Stuff that should be in the Android core OS, not added by Motorola.
Gimmicky stuff that people will ignore.
Spooky, cringe-worthy NSA sonars that would cause consumers to run for the hills.

4. Price: The solution for everything.

Economics 101 tells us that no matter the shortcoming, every product, service and even the stock market itself will sell if the price is low enough. Google is already selling the Nexus line of smartphones and tablets at prices lower than other equivalent devices.

The 8-gig version of the Nexus 4 sells for $299; the 16-gig version $349. That device was made available last November, and was missing LTE. It’s now a mid-range device, lower than the Moto X would be if launched as rumored.

The $299/$349 prices for the Nexus 4 are the most favorable in the market. Could the Moto X be priced similarly? Seeing that it’s got higher specs, how would it be explained if the price were to be even lower, such as $249 or even $199? Everyone in the industry tells me that you just can’t make a phone of that grade at that price.

If a phone of that caliber can be made for $299 or below — let alone $199 — profitably in Texas, we would instantly know why Rick Perry is leaving the governorship and focusing on running for president in 2016. It would mean that Texas is more competitive than China.

It is entirely possible that Motorola could sell this phone at a loss, courtesy of Google’s willing to fund the shortfall. The motivation would be some new avenue of monetizing this phone that’s somehow not happening on Androids sold by Samsung, LG, HTC, Sony (SNE) and others. I have no idea what that would be precisely, but generally speaking Google is all about learning three things from you:

Where you are.
What you shop.
What you think.

If Moto X gives Google some sort of advantage in achieving these goals, it could be willing to fund an otherwise irrationally low price. The problem here is of course what this would do to the other Android device makers, who surely would not appreciate competing against its operating systems supplier.

Conclusion: I don’t see it.

Aside from being made in Ft.Worth, Texas, the Moto X approaches its launch date with all the market’s anticipation of James Bond 007 looking to get a new revolutionary gadget. Perhaps they will surprise us all with something not just unusual, but also useful.

The problem is, after examining the hardware and software opportunities for Moto X, imagining such a useful advance in the smartphone world is difficult. The only remaining avenue appears to be price, which in and of itself is also a two-edged sword.

[Cross posted at The Street]