Google is working on a new top-secret handset codenamed the ‘X-phone’ which the search engine giant hopes will allow it to muscle in and compete with Apple and Samsung for a share of the $219 billion smartphone market.

Having acquired Motorola seven months ago for $12.5 billion, Google wants the phone to boast as yet unspecified cutting-edge features which will set it apart from the iPhone 5 and Galaxy models which have a controlling percentage of the lucrative smartphone market.

However, the software giant is said to have encountered practical problems with producing hardware, causing a re-think for initial plans for the X phone – such as using a bendable screen for greater flexibility.

Cell phone pioneer Motorola is said to be working on two fronts with the X phone. The first is a device which will be sold through service provider Verizon and the other is an X tablet which it hopes will compete again against Apple and Samsung’s market leading products.

The Wall Street Journal has claimed that the development of Google’s next generation smartphone is fraught with difficulty for the Mountain View, California firm as it attempts to manage complex relationships with Samsung who utilise Google’s Android operating system.

According to the newspaper, Dennis Woodside, a former Google executive who is now Motorola’s CEO declined to discuss any products under development.

He did say though the company is ‘investing in a team and a technology that will do something quite different than the current approaches.’

He said while Motorola has ‘fallen under hard times,’ it ‘now has the support of a shareholder in Google that has resources to do big things.’

Looking at the development opportunities for a successful handset, Woodside added that only one billion of the world’s seven billion people use smartphones, calling that ‘an incredible opportunity.’

It is thought that the design features that Google and Motorola are looking to introduce include high quality applications for the phone’s camera and photo software, including better color saturation and the ability to take panoramic shots said two sources to the Wall Street Journal.

However, the development teams are said to have found that the proposed features are too draining on battery life or have already been utilised successfully on the iPhone 5 which was launched earlier this year.

They also encountered problems when they tried to use a bendable screen and materials such as ceramics that would allow the X Phone to be stress resistant and be made into different colours.

One of the key research areas for the X Phone was Google’s recent acquisition of Viewdle, an imaging and gesture-recognition software.

Despite the issues that have been experienced in the production of the phone, the handset is still expected to be released some time next year.

When Google purchased Motorola in May, industry analysts thought the move to be controversial and believed the Internet giant to have bought up the struggling cell phone maker in an effort to acquire patents in case Apple of Samsung sued Google for any technologies produced in a smartphone they released.

Indeed, if Google was to produce its own phone and operating software package it could threaten the relationship it has with Samsung and their popular Galaxy handsets.

Google Chief Executive Larry Page has told the Motorola team to ‘think big’ and aspire to reach the scale of Samsung’s mobile business, and promised a significant marketing budget for the unit, said people familiar with the matter.

James Gilbert | Elite.