Guess How Much It Costs To Build The Moto X? (GOOG)
Ever since Google (NASDAQ: GOOG) acquired Motorola Mobility in 2011, expectations have been high about just what kind of smartphone the marriage would produce.
Now that the world knows about the Moto X, what it does, and how much it will sell for ($579), the next question might be, “What does it cost to build?”
According to AllThingsD, market research firm IHS has the answer: $221. Based on the breakdown by IHS, the actual cost of components is $209 with another $12 added for U.S. manufacturing costs.
Google decided to have the phone assembled by Motorola in Texas to allow for custom colored shells and engraving options that would not be possible if the device was manufactured overseas.
Color customization and engraving isn’t the only thing consumers get for their $579 ($199 with a two-year contract from most carriers). The Moto X is an advanced phone that continuously listens for voice commands and even changes its behavior based on environment, such as when the user is driving in traffic.
IHS analyst Wayne Lam told AllThingsD, “What Google and Motorola are trying to do is not play the game of ‘bigger is better’ that everyone else is playing. They are looking for ways to differentiate themselves from the pack and push the user experience in a new direction.”
As for the cost of production, the components do come at a premium compared with some other smartphones. The $221 cost of the Moto X is considerably more than the estimated $167.50 production cost of the Apple (NASDAQ: AAPL) iPhone 5, according to CNET.
On the other hand, the Samsung Galaxy S4, which IHS estimated to cost $237 in May, according to phone Arena comes in at slightly more than the Moto X.
It’s important to note that the difference in cost between the Moto X and iPhone isn’t all attributed to the cost of manufacturing in the U.S. The $12 it will cost to produce the Moto X in Texas is only $4 more than the $8 cost of manufacturing the Apple iPhone in Asia according to The Verge. The manufacturing cost of the Galaxy S4 is estimated at $8.50.
Since most new smartphones end up retailing for around $600 ($200 with a contract), differences in manufacturing costs can matter when it comes to the bottom line.
Verizon (NYSE: VZ) confirmed via Twitter that the phone would be available online Thursday and in stores “in the coming weeks” according to BGR which reviewed the phone and called it the best mass-market Android phone they had ever used.
At the time of this writing, Jim Probasco had no position in any mentioned securities.
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